Investment Rating - The report initiates coverage on Nanji E-commerce with a "Buy" rating and a target price of 6.00 RMB, corresponding to a 26x PE for 2026 [1][9]. Core Views - The company is undergoing a significant brand transformation, shifting from an open authorization model to a self-sourcing and invitation-based franchise model, aiming to enhance product quality and restore brand image [1][2]. - The company is expected to achieve positive revenue growth in 2024, with a focus on expanding product SKUs and enhancing both online and offline sales channels [1][20]. - The report highlights the company's strategic pivot towards a "quality-price ratio" consumer demand, positioning itself as a provider of high-quality products at competitive prices [2][19]. Summary by Sections Company Overview - Nanji E-commerce, established in 1998, operates under national brand Nanji Ren and international brands such as Cardin Crocodile and Baijiahao, focusing on e-commerce and brand authorization services [1][25]. Brand Transformation - The company is implementing a dual-track operation model combining self-sourcing and franchise, enhancing product capabilities through collaboration with high-quality suppliers and luxury design teams [3][19]. - The introduction of a light luxury product line in September 2024 has significantly improved brand perception, with daily sales increasing from approximately 200,000 RMB to 20 million RMB by the end of December [2][20]. Supply Chain Reform - The company is reforming its supply chain by adopting a SPA model, which includes self-sourcing and a whitelist invitation system for franchises, thereby creating industry barriers [3][19]. - The focus on high-quality materials and advanced production techniques is expected to enhance product competitiveness and meet consumer demands [3][19]. Sales Channels - The company is leveraging both online platforms like Douyin and traditional e-commerce channels to drive sales, with Douyin's GMV showing a year-on-year increase of 103% in December 2024 [4][20]. - Offline, the company is testing self-operated retail through pop-up stores, with plans to open fixed stores in 2025, which could become a future growth driver [4][20]. Financial Projections - The report forecasts the company's net profit for 2025-2027 to be 331 million RMB, 575 million RMB, and 796 million RMB respectively, with a significant turnaround expected in 2025 [6][21]. - Revenue is projected to grow from 3.995 billion RMB in 2025 to 5.605 billion RMB in 2027, reflecting a compound annual growth rate of approximately 18.9% [6][21]. Market Positioning - The report contrasts its views with the market, asserting that despite previous challenges, the brand's strong recognition and strategic repositioning towards quality-price ratio will enable it to regain growth momentum [5][24]. - The company aims to continuously enrich its product offerings and expand its market presence, particularly in the homewear and bedding categories through its Baijiahao brand [20][23].

Business Strategy and Planning - In 2025, the company plans to reshape its dealer and supply chain systems, focusing on the re-launch of the light luxury series and expanding product categories, including women's innerwear and home textiles [1] - The company aims to increase its market share through centralized and personalized promotions with dealers [1] - The company expects significant sales growth as new products are launched and new stores are opened [1] Sales Performance - The daily sales for the "Nanji Ren" brand from late February to early March 2025 were approximately 20 million [3] - The "Bai Jia Hao" brand achieved daily sales of about 13 million during the same period, with a projected GMV of 2.5 billion in 2023 and 4.7 billion in 2024 [3] - The company anticipates a substantial increase in overall GMV in 2025, with the shelf segment's sales ratio targeted to rise to 45% [3] Retail Expansion - The company opened a pop-up store in Shanghai in December 2024, which received positive consumer feedback, and plans to open more pop-up stores in 2025 [4][5] - Future product offerings in physical stores will include customized products and a rotation of new items every two weeks to maintain consumer interest [5] Product Development - The light luxury series will feature 17 SKUs in 2024, with plans to expand the product line in 2025 to include quick-drying T-shirts and lightweight down jackets [5][6] - The company emphasizes a "big item, big hit" strategy for self-sourced products while promoting a "small item, small hit" approach for franchise products [6] Supply Chain Management - The company employs strict standards for supply chain management, ensuring quality and efficiency by collaborating with over 40 carefully selected factories [8] - A rigorous pre-qualification process for factories includes assessments of production capacity and quality control [8] Dealer Management - The company collaborates with experienced dealers and implements a replacement mechanism based on operational performance [9] - A centralized marketing strategy is employed to ensure alignment between major marketing activities and personalized marketing efforts [9] Marketing Investment - In 2024, the company increased marketing investments to enhance brand influence, including collaborations with media and promotional activities [11] - For 2025, the company plans to optimize marketing strategies through social media and enhance consumer engagement via offline store upgrades [11]