In the market environment of weak macroeconomic recovery and continuous adjustment of the e-commerce industry, domestic e-commerce operators have generally felt the pressure of growth in recent years.

However, on the positive side, the period of industry adjustment is usually accompanied by new business opportunities, during which enterprises may open up a new growth pattern by optimizing their own business strategies.

By the turn of summer and autumn, the earnings season for Hong Kong listed companies has basically come to an end. According to Zhitong Financial APP observation, in a generation of operators, Youxihui Holdings (02177) is quite worthy of investors' focus.

According to the 2023 interim results announcement disclosed by Youqu Exchange, the company achieved an income of 902 million yuan (RMB, the same below) in the first half of this year, in line with expectations; its net profit was about 2.193 million yuan, a substantial increase of 33.832 million yuan over the same period last year. To add to the icing on the cake, Youinterest Exchange also announced in its financial report that it would resume its dividend, and the company planned to pay an interim dividend of HK $0.12 per share.

In the face of the "headwind" market environment, Youxihui has not only maintained a high fundamental toughness, but also made a breakthrough on the profit side. What on earth did Youxihui do right behind this high-quality newspaper "answer paper"? Looking forward to the future, can the company consolidate the operating results that have been achieved, or even further improve the speed and quality of development?

Optimize business quality and performance to turn losses into profits

An overview of Youinterest Exchange's 2023 interim results announcement shows that there is a strong meaning of reform and innovation, optimization and upgrading.

From the perspective of financial performance, Youinterest Exchange has many structural bright spots. First of all, taking the revenue side as an example, according to the category of commodities, the sales revenue of Youinterest's health product category reached 82.906 million yuan in the first half of the year, an increase of 18.1% over the same period last year, and the proportion of the company's total revenue also rose to 9.2%, an increase of 3 pct over the same period last year.

Youxihui's health products are "full fire", which may be due to the company's strategic foresight and keen market sense. It is understood that in the first half of the year, based on the prediction of market demand, Youqu Hui took the initiative to adjust its product structure and sales strategy, vigorously increased the category of health products, and expanded the sales channels of this category accordingly. Under the combination of multiple measures, the sales revenue of health products in Youxihui has increased by leaps and bounds.

Youqu Hui aims to expand new e-commerce agent operation business in key categories and categories. During the period, YouTube partnered with Kobayashi Pharmaceutical Tmall's official flagship store, Yameng's skin care brand Hakase Beaute and Israel's high-end skin care brand ELEVATIONE.

In addition, it is worth mentioning that Youxihui's Douyin business continued high growth in the first half of the year, with revenue growing by 123% during the period, doubling from the same period last year. Among them, the revenue of Shiseido Douyin overseas flagship store operated by Youinterest Exchange and Ai Natural Douyin overseas flagship store increased by 188.3% and 123.3% respectively.

Let's take a look at the profit end, Youxihui has achieved outstanding performance. During the reporting period, Youinterest realized a gross profit of 241 million yuan, corresponding to a gross profit margin of 26.8%, an increase of 2.4 pct over the same period last year. During the reporting period, Youqu Exchange took the initiative to increase the sales proportion of products with high gross margins, and the product structure became healthier and more reasonable. The financial report shows that in the first half of the year, the gross profit margins of Youinterest's adult personal care products and health products reached 21% and 38.9% respectively, which were significantly higher than the same period last year.

In the challenging market environment, the profitability of Youxihui rises instead of falling, which is closely related to the company's positive business strategy of reducing cost and increasing efficiency. According to the financial report, the promotion and advertising expenditure of Youinterest Exchange decreased by 32.2% in the first half of the year, improving the promotion efficiency. In addition, the company's per capita income output increased by 29.7% compared with the same period last year. This shows that Youinterest Exchange has further improved its efficiency while strictly controlling expenditure, and achieved remarkable results in improving quality and efficiency.

It is surprising that the prospect is steady and good.

The high-quality "report card" of the China News confirms that the fundamentals of Youxihui are entering the upward channel again after the adjustment period. Looking forward to the future, investors in the secondary market may be optimistic about the growth prospects of Youinterest Exchange.

As a leading brand e-commerce operator in the industry, Youqu Huihui has accumulated rich customer resources and successful cases after years of development. At present, Youxihui cooperates with well-known brands such as SOFY, moony, Kobayashi Pharmaceuticals, Shiseido, Fitingsi, Gao Si, Dazheng Pharmaceutical, etc., and its customers cover many areas such as mother and baby, personal care, beauty makeup, health OTC and so on.

Next, on the basis of tamping the existing business, Youxihui will continue to seek breakthroughs through category customization, brand co-creation and other ways to further expand the number of customers and the breadth of the distribution industry. While actively expanding, Youxihui will also pay more attention to endogenous growth and cultivate its own brand in the health category.

In terms of channels, Youxihui will continue to strategically increase the resource investment of short video platforms such as Douyin, speed up the establishment and integration of KOL resources, and focus on promoting the construction of private domains for specific people in the field of high-end makeup and health.

The business level is surprisingly correct, and it can be expected that the fundamentals of Youinterest will continue to improve.

From the perspective of capital market, Youinterest Exchange is becoming more and more attractive to investors. In addition to the marginal improvement in financial performance, a number of important indicators of Youinterest Exchange have also shown a trend of accelerated improvement. For example, the asset-liability ratio of Youinterest Exchange in the first half of the year was 15.2% lower than that at the end of 2022, while the cash and cash equivalents of Youinterest Exchange at the end of June increased by 13.5% to 276 million yuan compared with the same period last year. All signs show that the intrinsic value of Youinterest Exchange is getting thicker and thicker.

Not to mention, as soon as it turned from deficit to profit, Youinterest Exchange decided to resume its dividend and generously pay an interim dividend of HK $0.12 per share to investors.

To sum up, in terms of fundamentals, Youxihui's profit has got rid of the external interference and returned to the channel of steady growth. at the same time, the company has sufficient growth momentum in terms of business prospects, and has the ability to continue to grow in the future. Then the superimposed company attaches importance to the "plus item" of shareholder return, and the investment value of Youinterest Exchange as a whole is self-evident. Investors might as well pay more attention to it at this stage.