Where to start

Citi has released a research report reiterating a "Buy" rating for East Buy (01797), with the target price held steady at HK$33. The bank stated it is awaiting the company's audited results, scheduled for release on August 21, at which point it will revisit its financial models.

Why the unchanged rating and target price

East Buy has issued a positive profit alert for fiscal year 2026, forecasting total revenue between RMB 5.6 billion and RMB 5.8 billion, representing year-on-year growth of 27% to 32%. Net profit is expected to range from RMB 520 million to RMB 550 million, a significant improvement compared to the RMB 6 million reported in fiscal year 2025. Based on the mid-point of the guidance at approximately RMB 5.7 billion, revenue is about 9% above market expectations, while net profit also surpasses the consensus estimate of RMB 480 million.

Details behind the financial improvement

Citi noted that East Buy's net profit margin for fiscal year 2026 is expected to reach a mid-point of around 9.4%, a substantial leap from the 0.1% recorded in fiscal year 2025. This marks the first time the profitability data has reflected the transformation of the membership platform business. The growth momentum was primarily driven by the second half of the fiscal year. Management attributed the performance improvement to the scaling of its own-brand products and an optimized product mix, an increase in the number and broadcast hours of its Douyin matrix livestream accounts, and the expansion of its proprietary app's membership base.