Northeast: Upgraded EAST BUY (01797) to a "buy" rating, transitioning from live e-commerce to a omni-channel brand retailer.

Northeast released a research report stating that EAST BUY (01797) is a live e-commerce brand key to the New Oriental Group, backed by group resources, a strong leadership team, and ample talent reserves. The group's offline educational resources can be fully integrated. The company is expected to have an EPS of 0.41/0.42/0.81 yuan for the fiscal years 2026-2028, with corresponding PEs of 58X/56X/29X, and the rating has been raised to "buy". Key points from Northeast: - New Oriental founder Yu Minhong has absolute authority and is deeply involved in company operations. - The company's leadership team has long-term experience in the New Oriental Group, with a sufficient reserve of senior executives within the group. In December 2025, Sun Jin took over as CEO of EAST BUY, excelling in standardized operations and team management. The education business provides a rich pool of teaching staff to support EAST BUY. - The company is focusing on developing the Shenzhen Agricultural Power Group as its core brand in retail. - In the first half of the fiscal year 2026, self-operated product GMV accounted for over 50%, with app users and membership systems continuing to expand. The company is gradually becoming a well-known online platform for selling high-quality, cost-effective agricultural and other products, introducing popular products such as sausages and lutein gummies. By the end of November 2025, the SPU had grown to 801 products. The company is expanding its paid membership system built around its own app to increase user retention and repurchase rates, enhancing user stickiness. - The company is vertically integrating its supply chain, upgrading warehousing and logistics, and planning to achieve instant retail through offline flagship stores. EAST BUY's transition from live streaming to building its own brand product system: - By enriching the SKU under the "EAST BUY" brand while creating popular products, the company is driving upstream resource integration through product hot sales. It has launched its own app and paid membership system, significantly building pre-warehouses and starting to set up offline stores. The company is taking a brand-centric approach with Shenzhen Agricultural Power Group, gradually creating a new retail model of Wuxi Online Offline Communication Information Technology Co., Ltd.: leveraging platforms like Douyin for online customer acquisition, utilizing offline stores as customer channels and immediate retail pre-warehouses for traffic inflow and fulfillment tasks, binding consumers with its own app and membership system to increase customer repurchase rates and loyalty. The bank believes that although the company's offline layout is not yet completed, once the Beijing flagship store model is up and running, and the Wuxi Online Offline Communication Information Technology Co., Ltd. format is integrated internally within the company (different from relying on other platforms) and achieves self-sufficiency (without the need for continuous burning of money), the number of offline stores will rapidly expand in a short period of time, leading to rapid revenue growth. Risk factors: Intensified industry competition, food safety risks, and slower-than-expected progress in offline business.