Investment Rating - The report initiates coverage on Nanji E-commerce with a "Buy" rating and a target price of 6.00 RMB, corresponding to a 26x PE for 2026 [1][9]. Core Views - The company is undergoing a significant brand transformation, shifting from an open authorization model to a self-sourcing and invitation-based franchise model, aiming to enhance product quality and restore brand image [1][2]. - The company is expected to achieve positive revenue growth in 2024, with a focus on expanding product SKUs and enhancing both online and offline sales channels [1][20]. - The report highlights the company's strategic pivot towards a "quality-price ratio" consumer demand, positioning itself as a provider of high-quality products at competitive prices [2][19]. Summary by Sections Company Overview - Nanji E-commerce, established in 1998, operates under national brand Nanji Ren and international brands such as Cardin Crocodile and Baijiahao, focusing on e-commerce and brand authorization services [1][25]. Brand Transformation - The company is implementing a dual-track operation model combining self-sourcing and franchise, enhancing product capabilities through collaboration with high-quality suppliers and luxury design teams [3][19]. - The introduction of a light luxury product line in September 2024 has significantly improved brand perception, with daily sales increasing from approximately 200,000 RMB to 20 million RMB by the end of December [2][20]. Supply Chain Reform - The company is reforming its supply chain by adopting a SPA model, which includes self-sourcing and a whitelist invitation system for franchises, thereby creating industry barriers [3][19]. - The focus on high-quality materials and advanced production techniques is expected to enhance product competitiveness and meet consumer demands [3][19]. Sales Channels - The company is leveraging both online platforms like Douyin and traditional e-commerce channels to drive sales, with Douyin's GMV showing a year-on-year increase of 103% in December 2024 [4][20]. - Offline, the company is testing self-operated retail through pop-up stores, with plans to open fixed stores in 2025, which could become a future growth driver [4][20]. Financial Projections - The report forecasts the company's net profit for 2025-2027 to be 331 million RMB, 575 million RMB, and 796 million RMB respectively, with a significant turnaround expected in 2025 [6][21]. - Revenue is projected to grow from 3.995 billion RMB in 2025 to 5.605 billion RMB in 2027, reflecting a compound annual growth rate of approximately 18.9% [6][21]. Market Positioning - The report contrasts its views with the market, asserting that despite previous challenges, the brand's strong recognition and strategic repositioning towards quality-price ratio will enable it to regain growth momentum [5][24]. - The company aims to continuously enrich its product offerings and expand its market presence, particularly in the homewear and bedding categories through its Baijiahao brand [20][23].

Core Viewpoint - The article discusses the rise of discount supermarkets like "万客来" and their impact on urban retail, highlighting their unique business strategies that attract a diverse customer base and generate high foot traffic. Group 1: Market Presence and Growth - Discount supermarkets like 万客来 have rapidly expanded across major cities in China, including Beijing, with stores often spanning thousands of square meters and attracting large crowds, especially on weekends [4][18][20]. - These stores have become local favorites, with 万客来 opening in 20 provinces and 潮衣库 reportedly generating nearly 10 billion in annual sales [4][5]. Group 2: Business Model and Customer Engagement - The business model of these discount supermarkets focuses on low prices and high volume, with products often displayed in a chaotic manner to create a sense of urgency and excitement among shoppers [11][12][27]. - Strategies such as offering free shopping bags and hosting promotional events help attract customers and encourage repeat visits, effectively turning these stores into community hubs [32][33][50]. Group 3: Consumer Trends and Preferences - There is a noticeable shift among younger consumers away from brand loyalty towards value-driven purchases, with many willing to buy non-branded or lower-cost items as long as they meet basic quality standards [41][43][47]. - The article emphasizes that the success of these discount stores is not solely based on low prices but also on providing a satisfactory shopping experience and customer service, including return policies and alterations [52][53][54].