Northeast Securities has published a research report stating that HUITONGDA NET (09878) is benefiting from business optimization and AI empowerment, with ample cash on hand and strategic acquisitions of quality assets establishing operational pathways for industrial capital. The company's revenue is expected to resume growth with rapid improvement in profitability. The firm projects revenue of RMB 51.608 billion/54.120 billion/57.776 billion for 2025-2027, with net profit attributable to parent company of RMB 369 million/495 million/650 million, corresponding to P/E ratios of 20.29x/15.13x/11.52x. The rating has been upgraded to "Buy". The company has transformed into an AI-driven comprehensive service provider and, leveraging Alibaba ecosystem and government resources, is positioned to establish a second growth curve.
Northeast Securities' main viewpoints are as follows:
Why did Huitongda choose the rural market? (1) China's rural consumption space is vast: From 2020-2024, rural/urban retail sales CAGR were 6.00%/5.57% respectively, with rural consumption recovery outpacing urban areas. Breaking down volume and price factors, rural population proportion is gradually stabilizing. Future economic stability and rural revitalization may lead to population backflow. In terms of income, rural income elasticity has consistently exceeded urban levels, with rural/urban per capita disposable income CAGR of 10.48%/8.07% respectively from 2013-2024. Additionally, policy support through rural revitalization and trade-in programs is expected to continue driving market growth.
(2) Unique products, channels, and high service demand: On the product side, rural markets currently focus on fast-moving consumer goods, while home appliances and 3C categories are experiencing rapid growth. In 2024, home appliance/smartphone market size growth rates reached 18%/15% respectively, with penetration rates of 45%/55%, indicating strong demand with significant room for expansion. On the channel side, rural markets are dominated by mom-and-pop stores with flexible costs and annual profits of RMB 200,000-500,000. Net profit margins for durable goods like home appliances and agricultural products reach approximately 16.7%. However, facing pressure from instant retail and channel partners from higher-tier cities expanding downward, these stores have substantial management needs in supply chain, logistics, and marketing areas.
How should we view Huitongda's opportunity in rural markets? (1) Differentiated categories plus dual-end integration: Online+offline and supply chain+digital services form closed-loop advantages. Huitongda offers the most comprehensive category coverage, focusing on "three-high" categories that demand high consumer requirements. The company has the most extensive rural penetration with comprehensive coverage and dual-end empowerment capabilities providing full-chain services.
(2) Proactive adjustment by eliminating low-margin categories: 3C and home appliances remain differentiated advantage categories while actively optimizing low-margin businesses. The company is deepening external partnerships to expand leading brands while building proprietary brands to establish platform-based brand strength. The key lies in supply chain capabilities: reducing layers for external brands through direct brand channels, and constructing flexible supply chains for internal brands with demand-driven production.
(3) AI empowerment with high SaaS business growth potential: Based on international experience and domestic mature platform cases, AI products offer flexible pricing and faster scaling. Following AI introduction, SaaS penetration rates, payment willingness, and ARPU have all improved. As of H1 2025, the company achieved AI commercialization with AI-related revenue accounting for 20% of total services. On August 8, a comprehensive cooperation agreement was signed with Alibaba Cloud, including full-stack AI collaboration and cloud resource computing cooperation. The AI business is expected to accelerate growth going forward.