Investment Rating - The report maintains a "Buy" rating for the company [1] Core Insights - The company has shown a significant recovery in its core business profitability in FY2025H2, with a total revenue of 4.39 billion yuan, a year-over-year decrease of 32.7% [7][11] - The self-operated product strategy has proven effective, contributing 43.8% of total GMV, with total revenue from self-operated products reaching approximately 3.5 billion yuan [9][14] - The company is expanding its product matrix, increasing the number of SPUs from 488 in FY2024 to 732 in FY2025, diversifying into various categories [9][14] Financial Performance - The company achieved a GMV of 8.7 billion yuan in FY2025, with a second-half revenue of 2.2 billion yuan, reflecting a 10% quarter-over-quarter increase [11][14] - Gross profit for FY2025 was 1.4 billion yuan, with a gross margin improvement from 25.9% in FY2024 to 32.0% in FY2025 due to normalized discount levels [11][14] - The core net profit for FY2025 was 6.191 million yuan, with a year-over-year increase of 30% when excluding one-time expenses related to the divestiture of a subsidiary [11][14] Growth Projections - The company is expected to achieve revenues of 5.148 billion yuan, 5.965 billion yuan, and 6.773 billion yuan for FY2026, FY2027, and FY2028 respectively, with corresponding net profits of 244 million yuan, 294 million yuan, and 355 million yuan [13][14] - The projected P/E ratios for FY2026, FY2027, and FY2028 are 106.85, 88.87, and 73.65 respectively, indicating a favorable valuation trend [13][14] Strategic Developments - The company is enhancing its supply chain capabilities and has seen a significant increase in paid membership, with a 33% year-over-year growth to 264,000 members by the end of FY2025 [14] - The self-owned app channel has become increasingly important, contributing 15.7% of total GMV, with its share of self-operated product GMV rising from 16.3% in FY2024 to 28.8% in FY2025 [14]

Summary of Dongfang Zhenxuan Conference Call Company Overview - **Company**: Dongfang Zhenxuan - **Industry**: E-commerce and Live Shopping Key Points and Arguments - **Multi-Platform Strategy**: Dongfang Zhenxuan employs a multi-platform strategy, with Douyin contributing approximately 80% of GMV, forming the company's core base. The company is also expanding into other e-commerce platforms like Taobao, JD.com, Xiaohongshu, and Pinduoduo without paid promotions [2][5] - **Brand Exposure Initiatives**: The company plans to utilize vending machines at New Oriental education institutions for brand exposure and will host family public welfare lectures to share product development concepts and brand stories, aiming to reach a broader potential user base [2][6] - **APP Development**: The Dongfang Zhenxuan APP focuses on self-operated products, achieving a 30-day repurchase rate of 50%. The company aims to increase app downloads and paid memberships through marketing activities, potentially including online concerts to attract users [2][7] - **Product Range and Quality Assurance**: The company offers 600 SKUs of self-operated products, with 300 available year-round. It employs big data to understand consumer needs and iterates on products while enhancing product quality through multi-layered quality control measures [2][10][9] - **Cost Reduction and Efficiency Improvement**: The company is implementing cost reduction and efficiency improvement plans, optimizing internal structures, and reducing full-time staff to enhance profitability [4][13][16] - **Self-Operated Product Performance**: Self-operated products account for about 50% of total sales, with plans to strengthen partnerships for broader distribution. The company focuses on health-related products and basic necessities for 2025 [11][12][17] Additional Important Content - **GMV Distribution**: The self-operated APP contributes approximately 15%-20% of total GMV, while Douyin and shelf e-commerce account for over 80% [4][18] - **Live Streaming Operations**: Dongfang Zhenxuan operates nearly ten accounts on Douyin, with the fresh produce account performing particularly well, achieving daily GMV exceeding 2 million RMB [4][21] - **Membership Growth Strategy**: The company is focusing on expanding paid membership through initiatives like the "亲友卡" (Friend and Family Card) to enhance user interaction and increase membership numbers [29][28] - **Future Plans for Product Development**: The company plans to introduce new health-related products and optimize existing offerings based on market data and user feedback [11][9] - **Stock Buyback and Incentive Plans**: The company initiated a 500 million RMB stock buyback plan last year, with 100 million RMB utilized so far. Future stock buybacks may occur based on management directives [30][31] - **Technological and Supply Chain Enhancements**: The company is focusing on optimizing its supply chain and technology systems to support growth and is considering selling self-operated products on other platforms to expand market share [32]