Core Viewpoint - The report from Shenwan Hongyuan maintains an "overweight" rating for Dongfang Zhenxuan (01797), citing the company's aggressive multi-live room and multi-anchor strategy, continuous development of high-margin self-operated products, and content advantages in the GEO marketing environment, leading to a strong increase in gross margin for 1HFY26 [1] Financial Performance - In 1HFY26 (from June 2025 to November 2025), Dongfang Zhenxuan reported revenue of 2.31 billion yuan, a year-on-year increase of 5.7%; the net profit attributable to shareholders was 239 million yuan, marking a turnaround from loss to profit. Revenue growth was driven by self-operated product sales, while profit improvement was due to enhanced product gross margins [2] Self-Operated Products and Innovation - The company's GMV for 1HFY26 was 4.1 billion yuan, a year-on-year decline of 14.6%. Within this, self-operated products accounted for 2.16 billion yuan, while third-party product GMV was 1.94 billion yuan. Excluding the GMV from the Huixing live room (which was divested in August 2024), GMV from Douyin's live streaming sales turned positive year-on-year by July 2025 and continued to grow until November 2025. The company developed 801 new self-operated products in 1HFY26, a 9.4% increase from 732 at the end of FY25. The gross margin for self-operated products is expected to rise from 21.5% in 1HFY25 to 33.7% in 1HFY26, a year-on-year increase of 12.3 percentage points. The focus of new product development has shifted from quantity to high repurchase rates, which helps increase procurement scale and reduce material or finished product costs, thereby boosting gross margins [3] Multi-Platform Sales Strategy - Dongfang Zhenxuan continues to open new accounts on Douyin and plans to initiate a long-term recruitment plan for new anchors. The company has also established online stores on various platforms including WeChat Mini Programs, WeChat Stores, Tmall, JD, Pinduoduo, and Xiaohongshu. The first offline experience store is set to open in Beijing's Zhongguancun in 2026, marking another step in the company's channel expansion [4] User Base and Paid Conversion - In 1HFY26, Dongfang Zhenxuan's app is expected to have over 300,000 paid fans, an increase from 264,000 at the end of FY25. The company has a substantial follower base of 42.79 million on Douyin (counting only the main account and six matrix accounts), providing a solid foundation for expanding the number of paid users. Future growth in paid users is expected to drive GMV growth [5]

Core Viewpoint - Oriental Selection's financial performance for the fiscal year 2025 shows a significant decline in total revenue and GMV, but a positive shift in net profit for its continuing operations, indicating a mixed outlook for the company moving forward [1][2]. Financial Performance - For the fiscal year 2025, Oriental Selection's total revenue from continuing operations (self-operated products and live e-commerce) was 4.4 billion yuan, a decrease of 32.7% from 6.5 billion yuan in fiscal year 2024 [1]. - The net profit for continuing operations turned from a loss of 96.5 million yuan in the first half of fiscal year 2025 to a profit of 6.2 million yuan for the entire year [1]. - Excluding the financial impact of the sale of Huixing, the net profit for continuing operations was 135.4 million yuan, an increase of 30% year-on-year [1]. - The gross margin for continuing operations improved from 25.9% in fiscal year 2024 to 32% in fiscal year 2025, attributed to the healthy development of self-operated products and live e-commerce [1]. Business Segments - The total GMV for self-operated products and live e-commerce in fiscal year 2025 was 8.7 billion yuan, a significant drop from 14.3 billion yuan in fiscal year 2024 [1]. - The total cost of revenue for continuing operations decreased from 4.8 billion yuan in fiscal year 2024 to 3 billion yuan in fiscal year 2025, a decline of 38.2%, primarily due to the decrease in GMV leading to lower inventory and logistics costs [1]. Product Development and Market Position - The GMV from Douyin still accounted for a large portion of total sales, while the GMV from the Oriental Selection App increased its share from 8.4% in fiscal year 2024 to 15.7% in fiscal year 2025 [2]. - The number of paid subscribers for the Oriental Selection App reached 264,300 in fiscal year 2025 [2]. - Self-operated products accounted for approximately 43.8% of total GMV in fiscal year 2025, up from 40% in fiscal year 2024 [2]. - The company has launched a total of 732 self-operated products, an increase from 488 in fiscal year 2024, indicating a focus on expanding its product offerings [2]. Stock Performance and Market Sentiment - Since July, Oriental Selection's stock price has increased by over 200% [2]. - The company faced recent controversies and rumors regarding its CEO, which have led to stock price fluctuations [4].