Summary of HeBai Group's Conference Call Company Overview - **Company**: HeBai Group - **Date**: October 2025 Key Points Industry Performance - **Real Estate**: Revenue for the first three quarters of 2025 decreased by over 50% [2][5] - **Appliance Business**: Despite stable performance in the first half due to subsidy policies, profits are expected to decline slightly for the year [2][5] - **Agricultural Products**: Revenue increased by 16.8% year-on-year, but net profit declined due to the cultivation period of the Feixi Logistics Park, putting pressure on overall profitability [2][5] - **Supermarket Sales**: In October 2025, supermarket sales grew by 27% to 350 million yuan, while department store sales saw a slight increase of 0.5% after previous declines [2][6] - **Overall Sales**: Appliance sales dropped by 50% year-on-year, while agricultural product sales rose by 13% to 550 million yuan [2][6] Financial Metrics - **Gross Margin**: - Supermarket: Approximately 14%, down 0.5 percentage points year-on-year [14] - Department Store: Approximately 12.5%, down 0.7 percentage points year-on-year [14] - Appliance: 7.4%, slightly up by 0.1 percentage points [14] - **Net Profit**: - Supermarket net profit fell from over 30 million yuan last year to less than 10 million yuan this year [14] - Department store net profit around 12 million yuan, with appliance net profit at approximately 1 million yuan [14] Strategic Initiatives - **Store Adjustments**: Plans to gradually adjust stores from 2026 to 2028, with significant sales and customer flow increases reported in adjusted stores [4][18] - **Private Label Development**: Nearly 500 private label products, with a 90% year-on-year increase in product count, but sales contribution remains below 2% [9][10] - **Supply Chain Optimization**: Direct procurement in Hefei region increased to over 70%, with plans to expand into fresh vegetables and fruits [10][12] Investment and Expansion - **Investment in Emerging Industries**: HeBai Group invested 900 million yuan in the Hefei Guosheng Capital Equity Investment Fund, focusing on semiconductors, new energy, and biomedicine [20][21] - **Store Expansion Plans**: Closed 35 stores this year but plans to open 10 new supermarkets, focusing on stabilizing the central Anhui region [7][13] Market Challenges - **Intense Competition**: The market in Anhui, especially Hefei, is nearing saturation with new entrants, leading to fierce competition in community shopping centers [15] - **Impact of Subsidy Policies**: The shift to a lottery system for appliance subsidies has led to a significant drop in sales since mid-July 2025 [24][25] Future Outlook - **Profit Margin Improvement**: Expected improvements in profit margins through store adjustments and supply chain enhancements [16][18] - **Marketing Strategies for 2026**: Preparing differentiated marketing strategies for the upcoming Spring Festival to maximize consumer opportunities [26] Additional Notes - **New Chairman Appointment**: The appointment of a new chairman is pending, with expectations for a decision by the end of 2025 [22] - **Tax Refund Stores**: Five stores in Anhui are part of the tax refund pilot, with potential for increased transactions if policies are streamlined [11]

Core Insights - The article highlights the rise of "supermarket tourism" in Henan, particularly focusing on the success of the supermarket chain "胖东来" (Pang Dong Lai), which achieved sales of 820 million yuan during the recent holiday period, surpassing its entire 2024 sales in just eight days [1][2] - The overall retail sales in Henan during the holiday reached 3.054 billion yuan, marking a 2.6% year-on-year increase, indicating a positive trend in consumer spending [1] - The emergence of new supermarket players in Henan, such as "华豫佰佳" (Hua Yu Bai Jia) and "淘小胖" (Tao Xiao Pang), is characterized by a focus on quality, service, and the development of private label products, moving away from a price-centric competition model [1][7] Group 1: Market Trends - The "supermarket tourism" phenomenon has gained traction, with consumers viewing supermarkets as attractions, leading to increased foot traffic and sales [1][2] - New supermarket entrants are rapidly expanding, with "淘小胖" planning to open new stores and "华豫佰佳" upgrading existing locations to enhance customer experience [2][3] - The focus has shifted from merely competing on price to emphasizing quality, safety, and customer experience, as consumers are increasingly discerning [7][8] Group 2: Private Label Development - The development of private label products is a key strategy for supermarkets, with "淘小胖" offering over 400 private label items across various categories [4][6] - Private labels are seen as a way to control product quality and reduce costs by eliminating intermediaries, thus providing better value to consumers [5][6] - "华豫佰佳" aims to increase the proportion of private label sales, currently at 15%, as part of its growth strategy [6] Group 3: Consumer Experience and Service - Supermarkets are enhancing their service offerings, such as free seafood processing, to attract and retain customers, reflecting a trend towards more personalized shopping experiences [9] - The integration of dining and entertainment options within supermarkets is becoming common, catering to younger consumers' preferences for a more engaging shopping environment [8][9] - The industry is moving towards a model that prioritizes customer loyalty and service quality over rapid expansion and price competition [7][9]