Goldman Sachs: EAST BUY's performance in the second half of the fiscal year is mixed, maintaining a "Sell" rating

Goldman Sachs published a research report indicating that EAST BUY (01797.HK) had mixed performance for the second half of the fiscal year ending in May this year, with the gross merchandise volume (GMV) declining by 55% year-on-year to RMB 3.9 billion, which is 15% lower than Goldman Sachs' expectations. However, by controlling operating expenses, the earnings per share during the period exceeded expectations. Excluding the one-time impact of the sale of "Walking with Glory," the net profit from continuing operations for the fiscal year 2025 is expected to grow by 30% to RMB 135 million.

Goldman Sachs has lowered its GMV forecast for EAST BUY for the fiscal years 2026 to 2027 by 1% to 3%. In response to the increased contribution of GMV from self-operated brand products, it has raised its revenue forecast by up to 10%. The adjusted net profit margin forecast for the fiscal years 2026 to 2027 has been increased by 0.2 and 1 percentage points, with the target price raised from RMB 8 to RMB 9. Due to still weak fundamentals and relatively high valuations, Goldman Sachs maintains a "Sell" rating on EAST BUY