效率正在提高，但投资者可能希望销量反弹

EEKA Fashion|03709.HK COMPANY UPDATE Efficiency is improving, but investors may desire a rebound in sales H F NGO, Brian, CFA SENIOR ANALYST BUY HK$11.00 brianngo@westbullsec.com.hk+8523896 29652701–2703,27/F, Infinitus Plaza, 199 Des Voeux RdCentral, Sheung Wan, HK EEKAFashion (03709.HK)delivered mixed 1H 2025 results, with revenue declining 6.1%YoYto RMB3,104.0mn while net profit increased 2.2% to RMB 289.0mn. However, the gross marginremained resilientat 76.4%, marginally improving from 76.3% in 1H 2024. Net profit margin expanded to 9.3% from 8.6%,reflecting disciplined expense management and operational efficiency improvements.The total numberof retail stores dropped to 1,765, of which the number of self-operated stores was 1,388. EEKA Fashion(03709.HK) Stock Rating(Previous Rating)BUY(BUY)Target Price(Previous TP)HK$11.00(HK$ 11.46)Current PriceHK$7.4452-Week RangeHK$6.18–HK$9.68Market cap. (HKD, bn)HK$5.2 Solid performance in shopping malls, dragged by the sales in department stores:The strategic pivottoward shopping mall locations showed encouraging progress. Despite a net reduction in shopping mallstores,the sales per store in shopping mallsimproved 12.5%.Notably, theGroup expanded its presencein premium locations such as The Mixc, increasing store count by 11 to 61. The average store size expanded8% to 182m²in 1H 2025. Performance in department storesremained sluggish and continued todragoverall retail performance. This channel weakness reflects broader structural shifts in Chinese consumershopping patterns and the ongoing impact of reduced foot traffic in traditional retail formats. An extraordinary performance in e-commerce:E-commerce revenue achieved robust 8.9% year-on-yeargrowth to RMB 594.9 million, reaching 19.2% of total revenue.Douyinand WeChat Video Channeldelivered exceptional growth, offsetting the retreat in EEKA Fashion Mall.It is alsosurprisingto see anincrease in the gross margin,reflecting the changesin the business strategyofe-commerce. The Groupalsoexpanded the e-commerce team, and it will participate in the TMall Super Brand Daythis year. Inventories remained our primary concern:Inventorylevels remained a key concern, with a total inventoryof RMB 1.5bn as of Jun 30, of which approximately 89% were finished goods. The Group also recordedinventory write-downs of RMB 29.6mn in 1H 2025,which was one of the primary reasons dragging theprofit margin.Management emphasized improving sales-through rates as a strategic priority, estimatingthat each 1% improvement in sell-through rate could generate an additional RMB 30mn in net profit. Efficiency is improving, but investors may desire a rebound in sales:While sales growth remains elusive,the Group demonstrated the ability to improve operationalefficiency and cost management,whichprovides downside protection. However, we still anticipate continued pressure on traditional retail channelsand expect single-digit declines in both revenue and net profit for FY 2025, adjusted for accounting policychanges related to depreciation.We, thus,revisedthe TP to HKD11.00per share, and webelieve asustained reboundin saleswill serve as the primary catalyst for meaningful revaluation, though visibilityon timing remains limited. Peers comparison Risk factors ◼Continued weakness in traditional retail channels◼Inventory managementremainschallengingamid demand uncertainty◼Intensifying competition in e-commerce platforms◼Macroeconomic headwinds affect consumer discretionary spending◼Limited room for further improvement in the operating efficiency◼Unable tomaintain the dividendpayout ratio Financial Statement West Bull Securities is a dedicated small/mid cap stock brokerage house. Find our research on: Alphasense, FactSet, Capital IQ,Refinitiv, Wind, Choice, Hibor,iFinDand發現報告. Ratings of West Bull Securities: STRONGBUY:absoluteupside of >50% over the next 12 monthsBUY:absoluteupside of >10% over the next12monthsHOLD: absolute return of-10% to +10% over the next 12 monthsSELL: absolute downside of >10% overthe next 12 monthsSTRONGSELL: absolute downside of >50% over the next 12 months Investors should assume that West Bull Securities is seeking or will seek investment banking or other related businesses withthecompanies in this report. Analyst certification:The views expressed in this report accurately reflect the analyst’s personal views of the subject securities andthat the analyst has not received and will not receive direct or indirect compensation in exchange for expressing specificrecommendations or views in this report. Disclaimer: This research report is not an offer to sell or the solicitation of an offer to buy or subscribe for any securities. The securities referredto in this report may not be eligible for sale in some jurisdictions. The information contained in this report has been compiled bythe Research Department of West Bull Securities Limited (‘West Bull Securities’) from sources that it believes to be reliablebut norepr