Core Insights - Amazon is experiencing a significant price increase on products, particularly those labeled as "Made in China," with nearly 1,000 items seeing an average price rise of about 30% since mid-April [1] - The median price of over 1,400 "Made in China" products on Amazon has increased by 2.6% from January to mid-June, surpassing the core inflation rate in the U.S. during the same period [1] - Price hikes are not limited to specific categories but are spreading to frequently purchased essential goods, including tech accessories, women's clothing, and kitchenware [1] Group 1 - The primary driver of the price increase is not supply and demand but rather policy changes, including a 10% base tariff on Chinese products and higher tariffs on steel-related products and automobiles [2] - New import rules have eliminated the previous exemption for small packages valued under $800, leading to price increases on platforms like Temu, where a pair of shoes has nearly doubled in price from $14 to $27 [2] - Amazon has attempted to downplay the impact of these price increases, stating that affected products represent only 1% of its top 100,000 best-selling items, but the effects are significant for price-sensitive consumers and sellers relying on low-cost strategies [2]

Core Viewpoint - The company is facing challenges in achieving its 30% sales growth target for FY25E due to weaker-than-expected sales trends, particularly in online sales in the US and China, and rising import tariffs impacting gross profit margins [1][5][7] Sales Growth Outlook - Sales growth in 2Q25E is expected to be slow, with estimates indicating a mixture of 10% growth in the US and negative growth in China and Europe, influenced by a high base from previous years and changing consumer interests [2][4] - The company has not altered its guidance of 30%+ sales growth for FY25E, but revised forecasts now suggest a more conservative 14% growth, down from 23%, with expectations of single-digit growth in 1H25E and 20% growth in 2H25E [4][7] Market-Specific Insights - In the US market, sales growth is projected at 10%, primarily driven by offline expansion, while e-commerce sales may face sluggish growth due to industry factors [4] - The Chinese market shows weak demand for small appliances and cookware, with potential year-over-year declines in sales for Carote in 1H25E and FY25E [4] - The European market is not a major focus for the company, leading to potentially weaker-than-expected sales growth [4] Impact of Tariffs - Recent increases in US tariffs on steel- and aluminium-based products could significantly impact gross profit margins, with total tariffs on Carote's products potentially reaching 73.3% [5][6] - The company may pass on about 15% of the tariffs through supply chain adjustments but will still face a 35% burden, leading to a revised gross profit margin assumption of around 33% for the US market in FY25E [6] Financial Forecast Adjustments - The company has downgraded its rating to HOLD and cut the target price to HK$ 4.64, based on a 10x FY25E P/E, reflecting a 28% reduction in net profit forecasts for FY25E due to weaker demand and higher import tariffs [1][7]