Group 1 - The company KEEP (03650) announced a share buyback plan on September 2, 2025, involving an expenditure of HKD 281,400 to repurchase 50,000 shares [1] - The repurchase price per share is set between HKD 5.61 and HKD 5.65 [1]

Core Viewpoint - The company reported a total revenue of 820 million yuan for 1H25, a year-on-year decrease of 20.8%, but achieved a non-IFRS net profit of 10 million yuan, indicating a return to profitability driven by improved gross margins in consumer goods and disciplined cost control measures [1][2]. Revenue and Profitability - The company's revenue for 1H25 decreased by 20.8% to 820 million yuan, with proprietary brand sports products revenue down 20.9% to 400 million yuan, while the gross margin for this segment improved by 3.3 percentage points to 34.8% due to a focus on high-potential categories [2]. - Online membership and paid content revenue fell by 22.9% to 340 million yuan, attributed to a decline in online event revenue, but the gross margin for this segment increased by 3.4 percentage points to 71.3% due to a higher proportion of subscription revenue [2]. - The overall gross margin for 1H25 was 52.2%, up 6.2 percentage points, primarily due to ongoing product mix optimization and cost reduction initiatives [2]. User Engagement and AI Development - The average monthly active users for 1H25 decreased by 24.2% to 22.49 million, with the average revenue per user increasing by 0.3 yuan to 6.1 yuan, and the average monthly subscription members at 2.79 million, reflecting a membership penetration rate of 12.4% [2]. - The company is transitioning from a content platform to an AI-driven model, achieving three major advancements in 1H25, including the completion of multi-agent MAS infrastructure and continuous iteration of the AI Coach feature [3]. - As of the end of July, the AI core daily active users exceeded 150,000, with plans to reach 1 million by 2025, and the AI Coach's dietary tracking feature has been adopted by one-third of AI interaction users, contributing to a retention rate of 79% [3]. Financial Forecast and Valuation - Revenue forecasts for 2025, 2026, and 2027 have been adjusted downwards by 15.4%, 7.2%, and 1.4% to 1.83 billion, 2.11 billion, and 2.35 billion yuan, respectively, due to the streamlining of non-core low-efficiency businesses [4]. - Non-IFRS net profit forecasts for 2025, 2026, and 2027 have been raised to 60 million, 100 million, and 160 million yuan, respectively, driven by improved gross margins and ongoing cost reduction efforts [4]. - The target price for the company is set at 8.82 HKD, reflecting a price-to-sales ratio of 2.3x for 2025, which is a premium compared to the average of comparable companies, attributed to the ongoing business transformation [4].

Core Insights - Keep reported a revenue of 822 million RMB for the first half of 2025, with an adjusted net profit of 10.35 million RMB and a gross profit of 429 million RMB, resulting in a gross margin increase from 46.0% to 52.2% compared to the same period last year [1] - The average monthly active users and average monthly subscription members for the first half of 2025 were 22.49 million and 2.8 million respectively, with a membership penetration rate of 12.4%, up from 11.1% in 2024 [1] - The company is undergoing a strategic transformation from a content-driven platform to an AI-enabled, data-driven fitness intelligence service, with significant progress in deploying AI infrastructure and restructuring core tools into AI coaching services [1] Financial Performance - Revenue for the first half of 2025 was 822 million RMB, with a gross profit of 429 million RMB and a gross margin of 52.2% [1] - The adjusted net profit was 10.35 million RMB, indicating a focus on profitability despite revenue contraction [1] User Metrics - Average monthly active users reached 22.49 million, while average monthly subscription members were 2.8 million, reflecting a growing user base [1] - The average revenue per monthly active user increased to 6.1 RMB in the first half of 2025 [1] Strategic Initiatives - The CEO explained that revenue contraction was due to a strategic decision to optimize product categories and channels, focusing on high-potential categories like equipment, apparel, and wearables while reducing low-margin businesses [1] - The company views this strategic shift as a quality improvement phase, setting the stage for future growth [1] AI Development - As of July 2025, Keep's AI core daily active users exceeded 150,000, with a significant retention rate for the AI diet tracking feature [2] - The company anticipates that AI daily active users could exceed 1 million by the end of the year, with AI revenue already surpassing 1 million RMB [2] - Projections indicate that AI annual recurring revenue (ARR) could exceed 200 million RMB by 2026 [2]

Core Viewpoint - Keep has demonstrated a significant turnaround in its financial performance for the first half of the year, achieving profitability and focusing on strategic initiatives for future growth [1] Financial Performance - In the first half of the year, Keep reported revenue of 822 million RMB [1] - The adjusted net profit was 10.35 million RMB, compared to an adjusted net loss of 167 million RMB in the same period last year, marking a successful turnaround [1] - Gross profit reached 429 million RMB, with a gross margin increase from 46.0% in the previous year to 52.2% [1] Strategic Focus - For 2025, Keep is concentrating on two strategic directions: advancing AI-driven platform architecture transformation and achieving operational profitability [1] - The company has successfully completed the reconstruction of its AI infrastructure and launched a basic version of the AI coach [1] - Keep has also focused on optimizing its business operations to achieve the adjusted net profit and reach a profitability inflection point [1]