Citibank: Maintains Oriental Selection (01797) “Buy” rating target price of HK$18.5

The Zhitong Finance App learned that Citi released a research report stating that maintaining the Oriental Selection (01797) “buy” rating indicates that its strategic shift in marketing, channel diversification, and operational efficiency is showing positive results, with a target price of HK$18.5.

After Dong Yuhui left his job, Dongfang's business showed resilience and gradually returned to a growth path. The average daily commodity transaction volume (GMV) initially fell to RMB 10 million to RMB 20 million, and has now rebounded to over RMB 20 million, close to the level of RMB 20 million to RMB 30 million when Dong Yuhui became independent. The number of followers on the company's main account has stabilized at around 29 million, and the total number of followers across all accounts is around 40 million.

The bank believes that Oriental Selection will strategically position the e-commerce season in the second half of the year, and at the same time shift from frequent discount activities to monthly membership activities to optimize profitability, while also maintaining the existence of major e-commerce festivals. Due to active promotional activities, the company's gross margin fell from 20% to 10% in the second half of the year, the target was to recover to 15% to 20% in the short term, and the long-term target was above 20%, mainly due to expected economies of scale.