Investment Rating - The report initiates coverage with a "Strong Buy" rating for the company [1]. Core Insights - The company is a leader in the circular economy, focusing on the second-hand electronics market, particularly in mobile and 3C recycling, and is expected to continue increasing its market share as the industry grows [1][7]. - The company has established strategic cooperation with JD.com, enhancing its advantages in recycling, disposal, and sales [1][7]. - The report highlights the company's multi-category recycling efforts and community-focused high-frequency recycling initiatives, which are anticipated to further enhance its growth potential [1][7]. Summary by Sections Company Overview - The company is the leading player in the domestic second-hand 3C recycling market, with a compound annual growth rate (CAGR) of 33% in revenue over the past five years [7][19]. - The company operates four main business lines: Aihuaishou, Pai Jitang, Paipai, and overseas business AHS Device, achieving a total transaction volume of 35.3 million units in 2024 [13][19]. Financial Performance - The company’s revenue is projected to reach 12.966 billion in 2023, growing to 16.328 billion in 2024, with a CAGR of 31% [2]. - Non-GAAP net profit is expected to grow significantly, with projections of 401 million in 2025 and 622 million in 2026, reflecting a growth rate of 28% and 55% respectively [2][19]. - The company has shown a consistent improvement in profitability, with Non-GAAP net profit margin reaching 1.9% in 2024 [19]. Industry Overview - The second-hand electronics market is experiencing rapid growth, with the total transaction scale expected to reach approximately 645 billion in 2024, reflecting a year-on-year growth of 17.6% [30][37]. - The recycling penetration rate for second-hand electronics remains low, with projections indicating significant room for growth as consumer awareness increases [49][50]. Competitive Landscape - The second-hand electronics industry is characterized by low concentration, with the company and its competitor, Zhuanzhuan, holding market shares of 7.9% and 7.4% respectively in the recycling segment [7][54]. - The company employs a multi-channel approach, integrating C2B, B2B, and B2C models to optimize its operations and enhance customer satisfaction [7][54].