Summary of East Buy (1797.HK) Earnings Review Company Overview - **Company**: East Buy (1797.HK) - **Industry**: E-commerce, specifically focusing on private label and live streaming sales Key Financial Results - **2HFY25 Performance**: - **GMV**: Rmb3.9 billion, down -55% YoY, 15% below expectations - **3P GMV**: Decreased by -63% YoY, 40% below expectations due to high return rates - **1P GMV**: Increased by 5% YoY, in line with expectations - **Revenue**: Rmb2.2 billion, down -46% YoY, in line with expectations - **Adjusted Net Profit**: Rmb198 million, down -34% YoY, but 90% above expectations - **Gross Profit Margin (GPM)**: 5.1% NPM, improved due to lower operating expenses [1][2][17] - **FY25 Full Year Results**: - **GMV**: Rmb8.7 billion, down -39% YoY - **Revenue**: Rmb4.4 billion, down -33% YoY - **Adjusted Net Income**: Rmb173 million, with a 30% increase in net profit from continuing operations to Rmb135 million when excluding one-off impacts [2] Operational Highlights - **Product Range Expansion**: Increased from 488 to 732 SPUs, including nutritional foods, pet foods, and clothing - **East Buy App**: Contributed 16% of GMV and 25% of revenue in FY25, with paid members reaching 264k, a 16% increase from the previous period [3][19] - **Multi-Platform Strategy**: Over 70% of FY25 GMV came from Douyin, with plans to explore offline channels [20] Forecast Adjustments - **FY26-27E GMV Forecasts**: Reduced by 1-3%, but revenue forecasts raised by 0-10% due to higher contributions from 1P private-label products [4] - **Adjusted Net Profit Margin**: Revised up by +0.2pp/+1.0pp for FY26-27E [4] Valuation and Price Target - **Current Price**: HK$31.62 - **Target Price**: HK$9.00, based on a 15x CY26E target P/E - **Valuation Concerns**: Current valuation remains high at 3x P/GMV and 59x P/E for FY26E, compared to peers [16][34] Risks and Investment Thesis - **Risks**: GMV pressure, especially in the 3P live-streaming segment, and elevated valuation relative to growth prospects - **Investment Rating**: Sell due to unclear near-term growth outlook and high valuation [37] Additional Insights - **Private Label Products**: Accounted for 44% of GMV and 80% of revenue in FY25, with strong momentum in nutritious products [19] - **East Buy App Growth**: Expected to contribute 21% of GMV in FY26E, with a target of 560k paid members by 2027E [19][23] - **DAUs and WAUs Stability**: Despite stable user engagement metrics, the app's growth potential remains uncertain [30] This summary encapsulates the key financial metrics, operational highlights, and strategic outlook for East Buy, providing a comprehensive overview for potential investors and stakeholders.