Core Viewpoint - Xiaohuangya Deying (02250) has shown significant performance improvement, driven by new self-operated city parks, successful overseas business expansion, and acquisitions in the toy sector, enhancing its IP matrix and sustaining positive development [1][2]. Financial Performance - In H1 2025, total revenue reached 0.82 billion yuan, a 37% increase year-on-year, while the net loss attributable to shareholders was 0.11 billion yuan, an improvement from a loss of 0.17 billion yuan in H1 2024 [1][2]. - Adjusted net loss narrowed to 0.09 billion yuan from 0.14 billion yuan in the previous year [1][2]. - The gross margin for the segment increased by 1 percentage point to 55.50%, while the promotional costs as a percentage of revenue rose by 2 percentage points to 14.73% due to initial high costs of new e-commerce initiatives [2]. Business Segments - E-commerce and other business revenues grew by 31% to 0.44 billion yuan, attributed to increased promotional efforts and expansion into other e-commerce platforms in China and Southeast Asia [3]. - Revenue from licensing business surged by 46% to 0.38 billion yuan, with significant growth in live entertainment licensing and design consulting services [3]. Strategic Acquisitions - The company announced plans to acquire approximately 27.74% of the toy company HIDDEN WOOO for 0.14 billion yuan in cash and 0.24 billion yuan in stock, along with providing a convertible loan of about 0.10 billion yuan [2]. - This acquisition aims to enhance HIDDEN WOOO's overseas business expansion and improve the company's overall performance through financial consolidation [2]. Regional Performance - In H1 2025, revenue from mainland China was 0.76 billion yuan, with Hong Kong, Southeast Asia, and other regions contributing 0.01 billion yuan, 0.04 billion yuan, and 0.01 billion yuan respectively [4]. - The company has been expanding its overseas e-commerce operations in Thailand, Indonesia, and the United States since 2022, with significant growth in Southeast Asia and Taiwan [4].

Investment Rating - The report assigns a "Buy" rating for the company, marking the first coverage of the stock [8]. Core Insights - The company's performance has significantly improved, with a notable increase in revenue and a reduction in net losses. The first half of 2025 saw total revenue of 0.82 billion yuan, a year-on-year increase of 37%, and a narrowed net loss of 0.11 billion yuan compared to a loss of 0.17 billion yuan in the first half of 2024 [1][2]. - The company is actively expanding its business through acquisitions, specifically targeting the trendy toy sector. It plans to acquire approximately 27.74% of HIDDEN WOOO for 0.14 billion yuan in cash and 0.24 billion yuan in stock, which will enhance its IP matrix and support overseas expansion [2][3]. - The company has experienced a recovery across all business lines, with e-commerce and other business revenues increasing by 31% to 0.44 billion yuan, driven by enhanced promotional efforts and expansion into new e-commerce platforms [3][4]. Summary by Sections Financial Performance - In the first half of 2025, the gross margin increased by 1 percentage point to 55.50%, while promotional costs as a percentage of revenue rose by 2 percentage points to 14.73% due to initial high costs associated with new e-commerce initiatives [2]. - The adjusted net loss rate improved by 15% year-on-year to 13.05%, indicating a significant enhancement in profitability [2]. Business Expansion - The company is focusing on expanding its e-commerce operations in Southeast Asia, Taiwan, and the United States, with revenue growth in these regions of 145% and 297%, respectively [4][7]. - The company has launched self-operated city parks, which are expected to contribute new revenue streams alongside ticket sales and IP product sales [8]. Earnings Forecast - The company is projected to see substantial earnings growth, with EPS estimates of 0.01, 0.04, and 0.13 yuan for 2025, 2026, and 2027, respectively. The current stock price corresponds to PE ratios of 119, 30, and 10 for the same years [8][10].