Thanks to the trade-in subsidy policy, we expect the company's revenue growth rate to pick up in the third quarter, adjust the target price to HK$155/$40, and maintain the “hold” rating.

Thanks to the introduction of trade-in subsidy policies across the country, we expect the company's revenue growth rate to pick up in the third quarter. The revenue for the third quarter is expected to be RMB 258.2 billion, an increase of 4.2% over the previous year. GMV is expected to achieve high single-digit growth. By category, under the stimulus of trade-in subsidies for home appliances, the revenue growth rate of the electrified category is expected to correct; the household goods category is expected to continue its good growth trend, with the supermarket category maintaining double-digit growth. As the company increases its investment in user acquisition and activation, we expect the number of users to maintain rapid growth in the third quarter.

The Double Eleven promotion period has been further extended this year, and the company's discounts are also expected to increase, and focus on the consumer experience. We believe that in the fourth quarter, the company is expected to benefit from trade-in policy incentives and Double Eleven promotions to achieve a further increase in revenue growth. We adjusted the target price to HK$155/$40, corresponding to 2024E/2025E 10.4x/10.0x P/E, maintaining the “hold” rating.

Investment risks: Industry competition intensifies; user growth falls short of expectations; profit margins fall short of expectations.