Zhongtai: The business environment continues to improve, domestic brand is expected to steadily develop towards the positive direction.

Zhongtai released a research report stating that during the Double 11 period, domestic brands overall achieved impressive results. Proya Cosmetics' GMV on Tmall increased by more than 10% and on Douyin by more than 60%; KFM online channels grew by more than 80% and KELIJIN's overall channels by more than 150%, showing strong performance; HANSHU online channels grew by 44%; Newpage's GMV exceeded 100 million yuan and gradually increased; Wanmei's GMV on Tmall increased by 140% and PL's overall channels GMV reached 286 million yuan, a year-on-year increase of more than 37%. Against the backdrop of a stable overall traffic dividend and a more favorable business environment for merchants, in the short term, domestic brands actively responded to changes in platform traffic and demonstrated stronger operational capabilities. From a medium to long-term perspective, the attractiveness of brands is gradually being reflected. Zhongtai believes that both GMV performance and profit margin levels are expected to stabilize and improve. Zhongtai's main points are as follows: Changes in the platform: From a traffic dilemma to gradual optimization of the supply-side ecological environment. 23-24 years will bring many challenges to e-commerce platforms. Since 2018, the rise of live e-commerce has triggered a new wave of traffic. However, as the wave of live broadcast traffic dividends recedes, the competition among shelves, content, and social traffic has become more intense, leading to an increase in customer acquisition costs for platforms and merchants. Over the past two years, under the low-price traffic tilt strategy, platforms have not achieved the expected better growth in GMV, prompting them to reassess the negative effects of low prices. Since the beginning of this year, platforms such as Tmall and Douyin have shifted their traffic mechanisms to be GMV-oriented. In this context, optimizing the supply side may become an important lever for platforms to enhance network effects. The balance of power between platforms and merchants may gradually change. This year's Double 11 events, such as Tmall's rapid refunds, commission returns, and support for return guarantees, once again demonstrate that the business environment for merchants has improved. In the content field, top KOLs still hold the traffic high ground, but store broadcast and self-broadcast are on the rise. During this year's Double 11, we found that compared to the absolute bargaining power of super top anchors in the past, the ace of "lowest price on the whole network" is diminishing, and brands may be reducing their dependence on super anchors to some extent, gradually gaining more pricing power. In a more mature commercial infrastructure and merchant ecosystem, consumers and brands can more easily form a closed loop, and the proportion of store broadcasts may gradually increase. At the same time, although Douyin is still swaying in the allocation of store broadcast/self-broadcast traffic, as an entertainment platform, the importance of self-broadcast cannot be underestimated. However, from the performance of brand self-broadcast accounts in terms of GMV, the trend towards self-broadcast is gradually emerging. Although the strategy of the Douyin platform has not yet solidified, whether actively embracing self-broadcast during this Double 11 or the trend of self-broadcast, brands have the ability to respond to unknown changes. Although the structure of top brands remains stable, competition remains fierce: overseas brands are facing pressure, increasing emphasis on KOLs and prices; domestic brands maintain price stability and actively respond to changes in traffic. In the third quarter of 24, the performance of overseas brands in the Chinese market may deteriorate further. This Double 11 event relied more on super top anchors and self-broadcast, while some brands offered greater price discounts. In contrast, domestic brands have relatively stable pricing and are gradually demonstrating their brand attractiveness (such as a weakening of the dependence on super top anchors). At the same time, their performance in response to traffic changes is more positive. Investment recommendation: Overall, domestic brands achieved impressive results during the Double 11 period. Proya Cosmetics' GMV on Tmall increased by more than 10% and on Douyin by more than 60%; KFM online channels grew by more than 80% and KELIJIN's overall channels by more than 150%, showing strong performance; HANSHU online channels grew by 44%; Newpage's GMV exceeded 100 million yuan and gradually increased; Wanmei's GMV on Tmall increased by 140% and PL's overall channels GMV reached 286 million yuan, a year-on-year increase of more than 37%. Against the backdrop of a stable overall traffic dividend and a more favorable business environment for merchants, in the short term, domestic brands actively responded to changes in platform traffic and demonstrated stronger operational capabilities. From a medium to long-term perspective, the attractiveness of brands is gradually being reflected. We believe that both GMV performance and profit margin levels are expected to stabilize and improve. Risk warning: Insufficient consumer confidence recovery, increased market competition risks, statistical information deviation, lagging information risk.