Yamato: EAST BUY (01797) impressive performance for the first half of the year, reaffirms outperforming the market rating.

Daiwa released a research report stating that based on the better-than-expected performance of product trading volume and gross profit margin of EAST BUY (01797), the group's profit forecast for the next two years has been raised by 42% to 97%. Considering the recovery in product trading volume, the "outperform the market" rating is reiterated, and the new 12-month target price is raised from HK$13.5 to HK$29, based on a 32 times price-earnings ratio for the average earnings per share of the next two years (originally 23 times). EAST BUY announced its performance for the first half of the 2026 fiscal year, with adjusted net profit of RMB 257 million, reversing the loss from last year; and the strong performance of a 36% gross profit margin was the key good news, with the gross profit margin of its own brand expanding from 24% to 29%, mainly benefiting from scale effects and the contribution of high-profit products such as health, nutrition, and daily consumer goods. Daiwa stated that after the group announced its performance, its view has become more positive, believing that it has overcome operating difficulties, with good development of its own brand, structural reduction of operating costs, and the opening of non-Douyin channels providing important choices for performance growth, and believing that the risk-return profile of the stock has improved.