Guosen Securities has released a research report maintaining an "Outperform" rating on EAST BUY (01797) and recommends monitoring the progress of its new live-streaming account development and the pace of new self-operated product launches. With the steady implementation of EAST BUY's self-operated product strategy, the company's operational investment rhythm and output efficiency are undergoing a phased restructuring. Based on the latest business progress and profit realization timeline, the brokerage forecasts the company will achieve net profits attributable to shareholders of RMB 487 million, RMB 564 million, and RMB 641 million for FY2026 to FY2028, respectively. The corresponding P/E ratios based on the latest market capitalization are 50x, 43x, and 38x. Long-term, the brokerage believes the continuous expansion of the company's live-streaming account matrix and sales channels holds potential for explosive revenue and earnings growth.
Key points from Guosen Securities are as follows: In the first half of FY2026, the company returned to profitability, with adjusted EBITDA significantly exceeding market consensus expectations. Total revenue reached RMB 2.312 billion, a year-on-year increase of 5.7%. Excluding the impact of the comparative period which included the "Yu Hui Tong Xing" live-streaming room, total revenue grew 17.0% year-on-year, indicating robust growth in core operations. During the reporting period, the company successfully turned a profit, reporting an adjusted net profit of RMB 258 million, compared to a loss of RMB 1.61 million in the base period. Adjusted EBITDA was RMB 315 million, significantly outperforming the institutional consensus estimate of RMB 191 million, and a marked improvement from a loss of RMB 68.22 million in the base period.
The multi-channel, multi-matrix strategy is beginning to show results, with self-operated products continuing to serve as the core growth engine. Total GMV for the period reached RMB 4.1 billion. Excluding the impact of the "Yu Hui Tong Xing" base period effect, GMV increased 16.4% year-on-year. The company's proprietary app contributed 18.5% of total GMV, with paid members reaching 240,000, demonstrating the ongoing validation of its development efforts. Concurrently, the company recently relaunched and established multiple new Douyin matrix accounts, such as those focused on poetry & wine, home goods, fruits & vegetables, nutrition & health, and snacks & instant meals. It is also actively exploring channels like WeChat, Xiaohongshu, and offline retail, with its first flagship offline store being prepared for opening in Beijing. This is planned to further strengthen consumer trust through physical product quality.
Self-operated products continue to be the core growth driver, reinforcing the company's positioning as a "product company." During the reporting period, self-operated product GMV accounted for approximately 52.8% of total GMV, surpassing third-party product GMV for the first time. By the end of the period, the cumulative number of self-operated product SKUs reached 801, up from 600 in the same period last year.
The healthy development of the self-operated product business drove an improvement in gross margin, while cost control efforts exceeded expectations. The gross margin for the period was 36.4%, an increase of 2.8 percentage points, primarily benefiting from the increased proportion of higher-margin self-operated products in GMV and the ongoing development of the self-operated product supply chain. Cost control was notably effective. The sales expense ratio was 19.0%, down 2.0 percentage points, and the administrative expense ratio was 3.7%, down 14.3 percentage points. The significant decrease in the administrative expense ratio was partly due to a high base from profit-sharing arrangements related to "Yu Hui Tong Xing" in the prior period and also reflected the company's effective cost management.
The new executive president is leading operational reforms aimed at broadening traffic sources and accelerating new product launches, which are expected to drive a new cycle of growth. In December 2025, EAST BUY appointed Sun Jin as the new Executive President. The company has undertaken a series of operational changes, such as aggressively expanding its live-streaming matrix and launching a "EAST BUY's Offer · New Anchor" selection program, accelerating cooperation with New Oriental's offline campuses, and speeding up new product introductions. These initiatives are expected to propel the company into its next growth phase.
Risk factors include GMV growth and channel expansion falling short of expectations, food safety risks, and public opinion risks.