Bocom Intl's report stated that the profit margin of Eastbuy (01797.HK) may bottom out in the third quarter of the 2024 fiscal year (ending on February 29th this year), and the company's profitability will improve quarterly in the fourth fiscal quarter. However, considering that the self-operated product is still aimed at increasing scale in the short term, there is still uncertainty in the investment. In addition, the group's main account flow growth faces challenges, and the total amount of commodity trade (GMV) is partially diverted by shelves and other channels.

The bank believes that 'Together with Hui' has entered a stable operating phase and contributed to profit increases. Although personnel costs may rise, the profit structure of Eastbuy is still better than that of other live streaming by influencers companies (MCNs). The bank expects the company's revenue to increase by 45% and 13% year-on-year in fiscal years 2024 and 2025, to RMB 6.6 billion and RMB 7.4 billion, respectively; The adjusted net profit is RMB 690 million and 840 million yuan respectively.

The bank has initiated coverage of Eastbuy and given it a 'neutral' rating, with a target price of HKD 13.4, bullish on its self-operated product strategy, but considering the uncertainty of short-term profit margin trends and recent business strategy management adjustments, it believes that the current price already reflects the short-term business growth potential.