Core Insights - The company reported a total revenue of 4.39 billion yuan for FY2025, representing a year-over-year decline of 32.7% [1] - The core business showed steady profit growth in H2 FY2025, with a revenue of 2.2 billion yuan, reflecting a quarter-over-quarter increase of 10% [1] - The gross profit for FY2025 was 1.4 billion yuan, down 17.0% year-over-year, but the gross margin improved significantly from 25.9% in FY2024 to 32.0% in FY2025 [1][2] Revenue and Profitability - The company achieved a GMV of 8.7 billion yuan for FY2025, with H1 and H2 GMV at 3.6 billion yuan and 3.9 billion yuan respectively [1] - The core net profit for FY2025 was 6.191 million yuan, while the adjusted core business net profit was 135 million yuan, marking a year-over-year increase of 30% [2] - Non-IFRS adjusted net profit for FY2025 was 174 million yuan, with significant adjustments for share-based compensation [2] Strategic Developments - The self-operated product strategy has become a key growth driver, contributing 43.8% of total GMV, with related revenue around 3.5 billion yuan [2] - The number of self-operated product SKUs increased from 488 in FY2024 to 732 in FY2025, expanding into various categories beyond fresh food [2] - The company’s own app channel has gained importance, contributing 15.7% of total GMV, with the app's GMV for self-operated products rising from 16.3% in FY2024 to 28.8% in FY2025 [3] Membership and User Engagement - The paid membership base for the company's app grew by 33% year-over-year, reaching 264,000 members by the end of FY2025 [3] - The company is expected to see continued growth in revenue and net profit over the next three years, with projected revenues of 5.1 billion, 6.0 billion, and 6.8 billion yuan for FY2026-2028 [3]

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]

Core Viewpoint - After the departure of key figure Dong Yuhui, Dongfang Zhenxuan's stock price has rebounded significantly, indicating a recovery from previous lows and a shift in business strategy towards self-operated products [2][5]. Group 1: Stock Performance - On August 12, Dongfang Zhenxuan's stock rose by 1.11% to HKD 30.86, with a total market capitalization of HKD 32.3 billion, reflecting a 245% increase from the low of HKD 8.92 at the time of Dong Yuhui's departure [2]. - The stock has also increased over 204% from its year-to-date low of HKD 10.12 [2]. Group 2: Leadership Changes - Dong Yuhui's departure on July 25, 2024, caused a significant impact, with the stock dropping 23.39% in a single day, resulting in a market value loss of over HKD 2.5 billion [3]. - Another prominent host, Duntun, left the company on June 18, 2024, citing contract expiration, although he expressed a desire to continue collaborating with Dongfang Zhenxuan [4]. Group 3: Financial Performance - For the first half of the 2025 fiscal year, Dongfang Zhenxuan reported a net loss of HKD 96.5 million, a stark contrast to a profit of HKD 160 million in the same period the previous year [3]. - Excluding the financial impact of the sale of a subsidiary, the core business achieved a profit of HKD 32.7 million during the reporting period [3]. Group 4: Business Strategy - Dongfang Zhenxuan has shifted its focus towards self-operated products, launching new sanitary products that have seen strong sales, with the first product selling out 180,000 units shortly after launch [5][6]. - The company is adopting a membership model, with 228,300 paid members as of November 2024, indicating potential for growth compared to competitors like Sam's Club, which has 9 million members [6]. Group 5: Market Positioning - The company is positioning itself similarly to high-quality retail brands like Pang Donglai and Sam's Club, focusing on consumer-centric product development and high-quality offerings [6].

Group 1 - The stock price of Dongfang Zhenxuan (01797.HK) surged by 16.82% to 27.5 HKD, with a year-to-date increase of 171.5%, indicating renewed institutional interest following a strategic shift from influencer-driven to product-driven operations [2] - According to Huaxi Securities, Dongfang Zhenxuan's revenue for Q4 FY2025 is estimated to be approximately 150 million USD, reflecting a nearly 30% year-on-year decline, although the rate of decline is narrowing quarter-on-quarter [2] - The company has shown continuous improvement in profitability despite challenges, with a non-GAAP operating profit of approximately 79 million RMB and an operating profit margin of about 7%, up by approximately 3% quarter-on-quarter [2] Group 2 - Dongfang Zhenxuan is increasing its investment in self-operated products, particularly in the domestic shrimp supply chain, with a partnership established with Charoen Pokphand Group's Dongying base [3][5] - The monthly demand for shrimp from Dongfang Zhenxuan is 150 tons, while the current production capacity of the partner is only 50-60 tons, leading to a supply gap that has resulted in nearly 50 days of stockouts [5] - The company has sold over 220,000 units of domestic white shrimp as of the end of July, indicating strong demand in a supply-constrained market [5] Group 3 - Since its rapid rise in June 2022, Dongfang Zhenxuan has undergone a stabilization phase, with analysts noting that while profit margins are under short-term pressure, the company is on a recovery path [6] - The estimated GMV for Dongfang Zhenxuan in FY2025 is around 7.5 billion RMB, with projections for FY2026 GMV to reach 9 billion RMB, highlighting significant growth potential [6] - The company’s paid membership business and self-operated products still have considerable room for growth compared to competitors like Sam's Club [6]