Investment Rating - The report assigns an "Outperform" rating to the company [4] Core Insights - The company is actively expanding its brand incubation business, which is expected to lead to the release of operational leverage and accelerate performance growth starting in 2026 [1][4] - Revenue and net profit are projected to grow significantly, driven by the rapid growth of the brand incubation business and stable growth in the e-commerce operation business [4][10] Financial Summary - Total revenue is forecasted to reach 15.4 billion, 24.7 billion, and 29.6 billion yuan for 2025, 2026, and 2027 respectively, with growth rates of 34%, 60%, and 20% [4][10] - Net profit attributable to the parent company is expected to be 1.33 billion, 2.47 billion, and 3.02 billion yuan for the same years, with growth rates of 47%, 86%, and 22% [4][12] - The company’s gross margin is projected to improve, reaching 57.4%, 64.8%, and 66.5% in 2025, 2026, and 2027 respectively [10][11] Business Overview - The company primarily provides e-commerce services and brand incubation and management services, collaborating with various well-known domestic and international consumer brands [16] - The brand incubation business focuses on health and pet food sectors, with significant contributions from brands like Keman Duo and Yikali [4][16][22] - The e-commerce operation business is expected to maintain steady growth, with major contributions from the apparel category and partnerships with brands like Skechers and ECCO [4][16][22] Revenue Breakdown - The brand incubation and management business is anticipated to grow rapidly, with projected revenues of 6.0 billion, 14.6 billion, and 18.8 billion yuan for 2025, 2026, and 2027, reflecting year-on-year growth rates of 96%, 143%, and 29% [4][10][12] - The e-commerce operation business is expected to generate revenues of 6.5 billion, 7.0 billion, and 7.3 billion yuan for the same years, with growth rates of 15%, 7%, and 5% [4][10][12] Valuation - The company is assigned a target price of 93.42 yuan based on a 35x PE ratio for 2026, reflecting a valuation discount compared to comparable companies [4][14]

Investment Rating - The report maintains an investment rating of "Outperform the Market" for the industry [2][3]. Core Insights - The report highlights that the operating service providers in the industry are facing challenges due to the decline of online growth benefits since 2022. However, leading companies like Ruoyuchen, Qingmu Technology, and Yiwan Yichuang have made progress in developing their own brands and integrating AI technology, which may present new growth opportunities [4][38]. - The report identifies two main transformation directions for operating service providers: 1) Developing proprietary brands by leveraging online operational capabilities to enter the upstream brand side, and 2) Upgrading through AI empowerment to enhance service capabilities and develop new business units [4][38]. Summary by Sections Industry Overview - The operating service provider industry has seen rapid growth from 2016 to 2022 due to the onlineization of brands. However, after reaching a peak in 2020, the industry has faced a downturn as online growth benefits have weakened and some brands have regained operational control [6][9]. Transformation Strategies - The report outlines two main strategies for transformation: 1) Continuing to enhance service capabilities while integrating new technologies like AI to create new service points. 2) Transitioning towards brand development, which requires new capabilities in product development, supply chain management, and marketing [9][38]. Focus Companies - **Ruoyuchen**: The company has successfully developed its own brands in the high-end home cleaning and health product sectors, with significant revenue growth. In 2024, its proprietary brand revenue reached 501 million yuan, a year-on-year increase of 90.28% [17][39]. - **Qingmu Technology**: The company has entered the women's intimate care and functional beverage markets through external brand acquisitions, achieving a 126.51% year-on-year increase in brand incubation and management business in 2024 [24][39]. - **Yiwan Yichuang**: The company is transitioning to an AI e-commerce service model, leveraging its extensive brand operation experience and partnerships with major e-commerce platforms to enhance its service offerings [5][39]. AI Integration - The report emphasizes the importance of AI technology in the e-commerce sector, highlighting its potential to optimize supply chain operations, content marketing, and customer service management. Companies like Yiwan Yichuang and Qingmu Technology are actively integrating AI tools to enhance operational efficiency and customer engagement [29][33][34].