Core Viewpoint - First Shanghai Securities (Hong Kong) has issued a deep research report on Huitongda Network (9878.HK), giving it a "Buy" rating and setting a target price of HKD 23.38, indicating a potential upside of 50.8% from the closing price prior to the report [1][2] Group 1: Company Strategy and Market Position - Huitongda is positioned as a leader in China's sinking market, benefiting from the empowerment of innovative technologies such as AI, marking a turning point in its development [1] - The company has found a stable, high-quality, and sustainable growth path since its strategic upgrade and proactive business structure optimization in 2024, reinforcing its supply chain advantages while solidifying its core business [1] - Huitongda has established an AI strategic partnership with Alibaba Cloud, continuously optimizing its digital business and aligning its growth strategies with national policies and market trends, such as "AI+" and "targeted county assistance" [1] Group 2: Market Environment and Execution - The sinking market where Huitongda operates exceeds a scale of "trillions" and aligns well with national policy directions, providing a favorable environment for growth [2] - The company’s core business segments, smart supply chain and AI+SaaS, are entering a fast development phase, supported by investments and acquisitions to enhance its industrial layout and activate existing capital [1][2] Group 3: Capital Market Actions - Huitongda is expected to reach an inflection point in its performance by the first half of 2025, aided by a combination of "full circulation + repurchase plan + dividends," which will help the company re-enter the Hong Kong Stock Connect and enhance its long-term value [2] - The company is anticipated to achieve significant high-quality and rapid growth potential driven by rural revitalization policies, AI empowerment, and external acquisition strategies [2]

Core Viewpoint - HuTongDa Network (09878) is optimizing its business and leveraging AI capabilities, with ample cash on hand for acquiring quality assets, which may lead to revenue recovery and rapid improvement in profitability in the future [1] Group 1: Market Opportunity - The rural consumption space in China is vast, with a projected CAGR of 6.00% for rural retail from 2020 to 2024, outpacing urban growth at 5.57%, indicating a faster recovery in rural consumption [1] - Rural income elasticity is historically higher than urban income, with projected CAGRs of 10.48% for rural and 8.07% for urban disposable income from 2013 to 2024, supported by rural revitalization policies [1] Group 2: Product and Channel Dynamics - The product landscape in the lower-tier market is primarily dominated by fast-moving consumer goods (FMCG), with significant growth in home appliances and 3C products, expected to grow at 18% and 15% respectively in 2024 [2] - The channel structure is mainly composed of small family-run stores, which have flexible costs and annual profits ranging from 200,000 to 500,000, with a net profit margin of approximately 16.7% for durable goods [2] Group 3: Competitive Advantage and Strategy - HuTongDa is focusing on differentiated product categories and a dual-end approach, integrating online and offline services, as well as supply chain and digital services to create a closed-loop advantage [3] - The company is actively removing low-margin product categories while deepening external collaborations and developing its own brands to enhance platform brand strength [3] - AI capabilities are expected to drive significant growth in SaaS business, with AI-related revenue accounting for 20% of total service revenue as of H1 2025, following a comprehensive cooperation agreement with Alibaba Cloud [3]

Core Viewpoint - Northeast Securities reports that Huitongda Network (09878) is optimizing its business and leveraging AI, with ample cash on hand for acquiring quality assets, potentially leading to revenue recovery and rapid profit growth in the future [1] Group 1: Market Opportunity - The rural consumption space in China is vast, with a projected CAGR of 6.00% for rural retail from 2020 to 2024, outpacing urban growth at 5.57%, indicating a faster recovery in rural consumption [1] - Rural income elasticity is historically higher than urban income, with projected CAGRs of 10.48% for rural and 8.07% for urban disposable income from 2013 to 2024, supported by rural revitalization policies [1] Group 2: Product and Channel Dynamics - The product landscape in the lower-tier market is primarily fast-moving consumer goods (FMCG), with significant growth in home appliances and 3C products, expected to grow at 18% and 15% respectively by 2024 [2] - The channel structure is dominated by small family-run stores, which have flexible costs and annual profits ranging from 200,000 to 500,000, with a net profit margin of approximately 16.7% for durable goods [2] Group 3: Competitive Advantage and Strategy - Huitongda's strategy includes a differentiated product offering and a dual-channel approach, creating a closed-loop advantage through online and offline integration, as well as supply chain and digital services [3] - The company is actively removing low-margin products while deepening external partnerships and developing its own brands to enhance platform brand strength [3] - AI empowerment is expected to drive significant growth in SaaS business, with AI-related revenue accounting for 20% of total service revenue as of H1 2025, following a comprehensive cooperation agreement with Alibaba Cloud [3]

Core Viewpoint - Citi's report on HuTongDa Network (9878.HK) highlights a clear path for improving profitability and benefits from policy incentives, maintaining a "Buy" rating with a target price of HKD 23.0, indicating significant upside potential from the current stock price [1][2] Financial Performance - The company is expected to achieve steady revenue growth in 2025, driven by improved profitability [1] - Following strategic adjustments to reduce low-margin business, the company anticipates a substantial increase in profit margins for the year [1] Business Segments - The company effectively assists member stores in completing national subsidy qualification applications, which will boost revenue [1] - High-margin proprietary brand products are expected to significantly enhance overall profitability [1] Technological Integration - The company integrates mainstream large models (LLM) to launch AI+SaaS tools, improving product usability and customer penetration [1] - This technological enhancement aims to increase user stickiness and explore new growth engines for profit conversion [1] Market Recognition - Institutional recognition of HuTongDa Network's long-term growth potential is reflected in the acknowledgment of the "policy dividends + model upgrades + technological empowerment" logic [2] - The company's role as a "connector" in the lower-tier market is becoming increasingly clear, marking the beginning of its value reassessment journey post-strategic adjustments [2]

Core Viewpoint - The recent recognition of Huitongda Network with the "ESG Innovation Practice Excellence Enterprise" award highlights its commitment to integrating technology and innovative models to advance ESG principles and convert them into commercial value [1][4]. Group 1: ESG Integration and Business Model - Huitongda's ESG practices are deeply integrated with its business, focusing on the critical challenge of promoting rural revitalization and enhancing urban-rural circulation service capabilities [5][6]. - The company leverages digital technology and supply chain empowerment to create a sustainable industrial ecosystem in lower-tier markets, effectively connecting the production and retail ends [5][6]. - Huitongda's platform value enables it to cover a vast network of rural stores, allowing rural consumers to access products and services comparable to urban areas, thus stimulating consumption in lower-tier markets [5][6]. Group 2: Governance and Technological Upgrades - Huitongda is enhancing its ESG governance framework and upgrading AI technology applications to improve the quality and efficiency of its ESG practices, aiming for further breakthroughs in social and commercial value [7][8]. - The establishment of a Sustainable Development (ESG) Committee by 2025 will strengthen the execution of ESG strategies and improve transparency and risk resilience [7]. - The company has launched an AI+ strategy, introducing self-developed products to enhance its service capabilities and support its ESG initiatives [8][9]. Group 3: Future Outlook - Huitongda's recognition with the "ESG Golden Award" signifies a pivotal moment in its journey towards sustainable development and value creation [10]. - The company's innovative practices in the ESG domain are expected to solidify its sustainable development efforts and lead to a significant elevation in value [10].