Investment Rating - The investment rating for the company is "Accumulate" [1] Core Views - The company is acquiring a 65% stake in Jiangsu Xinsi Yu Investment Management Co., which will become a subsidiary, to enhance industrial synergy and resource integration [2] - The acquisition aligns with the company's strategy to expand its product categories, market segments, and business formats, particularly in the personal care industry [3] - The hair care market in China is projected to grow significantly, with a compound annual growth rate (CAGR) of 9.7% from 2020 to 2023, and expected to reach 81.25 billion yuan by 2028 [3] Summary by Sections Acquisition Overview - The company announced the acquisition of a 100% stake in Zhuhai Siyi Industrial Development Co., with a transaction price of 1.65 billion yuan [2] Strategic Analysis - The acquisition is part of a three-pronged strategy to expand product categories, market segments, and business formats, enhancing the company's position as a preferred service provider for families [3] - The target company, Siyi Industrial, is a leader in the hair care sector, with a unique integrated operation model combining products, services, and channels [3] Synergy Potential - The acquisition is expected to create multiple synergies in membership operations, market layout, channel sharing, and business expansion [4] - The company has a large member base, with over 64 million members on its app, which can be leveraged for cross-marketing with Siyi Industrial's 2 million members [4] - The company operates 500 large stores and is expanding into lower-tier markets, which can enhance service offerings and operational efficiency [4] Financial Projections - Revenue projections for 2025-2027 are 12.23 billion, 14.51 billion, and 16.51 billion yuan, with corresponding net profits of 480 million, 670 million, and 780 million yuan [5] - The expected earnings per share (EPS) for 2025-2027 are 0.38, 0.53, and 0.62 yuan, with price-to-earnings (PE) ratios of 39, 28, and 24 times respectively [5] Long-term Growth Drivers - Key growth drivers include continuous integration of the supply chain, expansion of joint ventures, and improvements in direct store profitability [5]