Group 1 - The company, Daxian Education (09986), has announced a conditional agreement to purchase 52% of Spark Media International Limited for HKD 104 million, with payment to be made through the issuance of shares upon completion [1] - The company aims to diversify its consulting services, including brand operation and management, to enhance its brand value and influence [1] - In the first half of 2025, the company expanded its brand portfolio to include two new beauty and health product brands and is actively exploring acquisition opportunities in related businesses [1] Group 2 - The target group operates primarily through its subsidiaries in China, focusing on brand empowerment, promotion, and operation in the beauty and health sector [2] - The acquisition is expected to enhance the company's capabilities in brand operation and management by leveraging the strengths of both companies for synergistic growth [2] - This strategic move is anticipated to increase the company's influence in the brand operation and management field, contributing to overall business growth and success [2]

Core Viewpoint - The report from Huaxin Securities indicates that RuYuchen is expected to see a significant improvement in profitability, with a projected gross margin increase of 11 percentage points to 56.92% in H1 2025, driven by changes in brand management and cost support strategies [1] Financial Performance - Gross margin is projected to increase by 11 percentage points to 56.92% in H1 2025 [1] - Sales and management expense ratios are expected to change, with sales expenses increasing by 11 percentage points to 45.40% and management expenses decreasing by 1 percentage point to 3.46% [1] - Net profit margin is anticipated to rise by 1 percentage point to 5.48% in H1 2025 [1] Business Strategy - The company has successfully incubated two proprietary brands in recent years, focusing on differentiated high-end fragrance home cleaning products and oral anti-aging products [1] - The brand "ZhanJia" targets the high-end fragrance market, while "FeiCui" focuses on high-potential categories like ruby oil [1] - Continued brand development and market expansion are expected to drive rapid growth in the company's performance [1] Investment Rating - The investment rating is maintained at "Buy" based on the anticipated improvements in profitability and growth prospects [1]

Investment Rating - The report maintains a "Buy" investment rating for the company [1] Core Views - The company's self-owned brand strategy is showing significant value, driving rapid revenue growth [4] - The company plans to repurchase shares worth 100-200 million yuan at a price not exceeding 76.8 yuan per share, which will be used for employee stock ownership plans [4] - The overall profitability has improved, with a net profit margin increase of 1 percentage point to 5.48% in the first half of 2025 [5] Financial Performance - In H1 2025, total revenue reached 1.319 billion yuan, a year-on-year increase of 68%, while net profit was 72 million yuan, up 86% [4] - The gross margin increased by 11 percentage points to 56.92%, with sales and management expense ratios changing significantly due to new brand cooperation methods [5] - The company's self-owned brands, including "Feicui" and "Zhanjia," generated revenues of 160 million yuan and 444 million yuan respectively, with "Zhanjia" seeing a 157% year-on-year increase [6] Market Channels - Revenue from online channels such as Douyin, Tmall, and JD.com saw substantial growth, with Douyin's revenue increasing by 239% and accounting for 37% of total sales [6] - The company is focusing on enhancing brand presence on Douyin to boost sales and brand equity [6] Brand Development - The "Zhanjia" brand is strengthening its market position with differentiated advantages, while "Feicui" is rapidly expanding its product range [7][8] - The company aims to enhance brand awareness and invest in high-potential product categories to capture market growth [8] Earnings Forecast - The company is expected to maintain high growth rates, with projected EPS of 0.79, 1.21, and 1.66 yuan for 2025, 2026, and 2027 respectively [9] - The current stock price corresponds to PE ratios of 76, 49, and 36 for the respective years [9]

Investment Rating - The report assigns a "Buy" rating for the company, marking the first coverage of the stock [4]. Core Insights - The company is expected to achieve a significant growth in performance, with a projected net profit for H1 2025 ranging from 0.63 to 0.78 billion yuan, representing a year-on-year increase of 62% to 100% [4]. - The self-owned brand strategy is highlighted as a key driver for growth, particularly with the "Zhenjia" brand's flagship product, the scented laundry detergent, showing strong sales momentum [4][5]. - The company is focusing on enhancing brand recognition and expanding its product offerings, particularly in high-potential categories such as fabric softeners and nutritional supplements [5]. Summary by Sections Performance Forecast - The company anticipates a net profit of 0.36 to 0.51 billion yuan for Q2 2025, reflecting a year-on-year growth of 36% to 94% [4]. - The expected earnings per share (EPS) for 2025, 2026, and 2027 are projected to be 0.79, 1.21, and 1.66 yuan respectively, with corresponding price-to-earnings (PE) ratios of 67, 43, and 32 times [6]. Revenue and Profit Growth - The company's main revenue is forecasted to grow from 1.766 billion yuan in 2024 to 4.57 billion yuan by 2027, with growth rates of 29.3%, 68.0%, 27.7%, and 20.6% for the respective years [10]. - The net profit is expected to increase from 106 million yuan in 2024 to 362 million yuan in 2027, with growth rates of 94.6%, 62.9%, 53.9%, and 36.9% [10]. Brand Development - The "Zhenjia" brand has achieved a 150% year-on-year sales increase across all channels in Q1 2025, and a 458% increase in GMV on Douyin [5]. - The "Feicui" brand has rapidly gained traction since its launch in September 2024, becoming a top performer in its category on platforms like Tmall [5]. Financial Metrics - The report outlines a projected return on equity (ROE) increasing from 9.6% in 2024 to 20.8% in 2027, indicating improving profitability [10]. - The gross margin is expected to rise from 44.6% in 2024 to 50.2% in 2027, reflecting enhanced operational efficiency [10].