China Galaxy International released a research report covering Huitongda Network (09878) for the first time, giving it an “increase” rating. The target price is HK$37.6.
China Galaxy International believes that Huitongda is a leading B2B business enterprise in the sinking retail market. The company has established multi-industry supply chain advantages and helps rural couple stores meet the shopping needs of consumers in the sinking market through direct sales products and one-stop SaaS solutions.
According to China Galaxy International, the catalysts for this rating include: 1) faster expansion of member stores boosting sales growth in FY2024; 2) the sinking market showed higher consumption flexibility than cities.
According to Frost & Sullivan's forecast, the compound annual growth rate of China's sinking market in 2020-2025 was 6.5%, reaching RMB 20.4 trillion. China Galaxy International believes Huitongda has huge potential for growth in this fragmented market.
China Galaxy International predicts that as the number of member stores continues to grow, Huitongda's sales will grow at a compound annual rate of 11% and net profit of 33% in the 2023-2025 fiscal year.