Investment Rating - The report initiates coverage on the company with a "Buy" rating and sets a target price of $7.64, based on an 18x adjusted PE for 2026 [1][7]. Core Insights - The company is a leader in China's second-hand circular economy, integrating the entire 3C second-hand recycling industry chain through four main business lines: Aihuiqiu, Pai Jitang, Paipai, and AHS Device, achieving a closed-loop system of C2B recycling, B2B circulation, and B2C retail [1][19]. - The company is expected to evolve from a fulfillment service provider to a brand owner, enhancing profit margins through retail and compliant refurbishment while expanding into multiple categories for growth [1][21]. Industry Overview - The second-hand electronics market is characterized by low penetration rates and high growth potential, with a projected transaction volume of approximately 702 billion yuan in 2024, reflecting a CAGR of 28.7% from 2020 to 2024 [24][27]. - The recycling penetration rate for 3C products in China is only 4.4% as of 2024, indicating significant room for growth compared to developed countries [2][24]. Company Advantages - The company’s competitive edge lies in its vertical integration of the entire industry chain, creating cost and efficiency barriers through resource collaboration [3][20]. - The company has established a strong partnership with JD.com, which significantly reduces customer acquisition costs, with nearly 40% of its recycling sources coming from JD.com [23][19]. Future Growth Prospects - The company plans to expand its store count from approximately 2,000 to over 5,000, which is expected to enhance fulfillment capabilities and drive revenue growth [4][21]. - The company is diversifying its recovery categories, including luxury goods and gold, which could open a second growth curve, with a total market gross profit potential of around 60 billion yuan [4][21]. Financial Projections - The company’s revenue is projected to reach 20.97 billion yuan in 2025 and 26.29 billion yuan in 2026, with a compound annual growth rate of 25.2% from 2025 to 2027 [6][11]. - The adjusted net profit is expected to be 4.06 billion yuan in 2025 and 6.76 billion yuan in 2026, with corresponding adjusted EPS of 1.82 yuan and 3.03 yuan [6][11].

Investment Rating - The report initiates coverage with a "Buy" rating for the company [1]. Core Insights - The company focuses on the second-hand 3C circular economy, leveraging both offline store expansion and online platforms like JD's "trade-in" to enhance user engagement and channel control. The report anticipates revenue growth of 27.2%, 23.2%, and 20.5% for FY25, FY26, and FY27, respectively, with projected Non-GAAP net profits of 421 million, 649 million, and 834 million RMB for the same years [8][17]. Summary by Sections 1. Circular Economy and Brand Development - The company has been deeply involved in the second-hand 3C electronic product sector for 14 years, becoming China's largest platform for second-hand consumer electronics. It operates four core business lines: recycling, B2B distribution, B2C retail, and overseas operations, creating a complete industry chain [17][18]. 2. Market Potential and Platform Dynamics - The second-hand consumer electronics market is experiencing rapid growth, with a projected CAGR of 12.7% from 2020 to 2024. The report highlights that China's second-hand electronic product penetration is significantly lower than global levels, indicating substantial growth potential [49][57]. 3. Supply Chain and Operational Efficiency - The company has expanded its offline presence to 2,092 stores across 291 cities, becoming a key player in the recycling business. It utilizes automation and digital technologies to enhance operational efficiency, reducing fulfillment costs from 12.9% in 2021 to 8.7% in 2025H1 [7][17][44]. 4. Financial Performance and Projections - The company has shown strong revenue growth, with a 2025H1 revenue of 9.645 billion RMB, reflecting a year-on-year increase of 29.85%. The report projects revenues of 20.769 billion, 25.584 billion, and 30.820 billion RMB for FY25, FY26, and FY27, respectively [40][41]. 5. Valuation and Market Position - The report estimates a target price of $5.3 per share, representing a 32% upside from the current price, based on a comparable company valuation of 14x PE for 2026. The company is positioned as a leader in the fragmented second-hand market, with significant room for consolidation [8][17][57].