China Merchants Securities International: Upgrading Oriental Selection (01797) Rating from “Hold” to “Buy” Target Price HK$27

The Zhitong Finance App learned that China Merchants Securities International released a research report stating that it raised the investment rating of Oriental Selection (01797) from “hold” to “buy” and maintain the target price at HK$27. The bank believes that Oriental Selection is steadily transforming into a platform centered around its own brand and omnichannel (Omnichannel) retail, and has successfully eliminated its dependence on top live broadcasters. The market is still using the previous valuation framework, which does not fully reflect the brand value of its own products or the potential value of offline retail expansion.

The bank predicts that Oriental Selection's gross commodity transaction volume (GMV) growth rate for FY2027/FY2028 will be 29%/13%, respectively, and the revenue growth rate will be 42%/16%, respectively. The revenue growth rate should be higher than GMV, mainly due to the continuous increase in the contribution of our own products. The bank raised the Dongfang Selection Investment Rating and maintained a price-earnings ratio of 30 times/25 times for the 2027/2028 fiscal year corresponding to the target price, based on a core net profit forecast of 814 million yuan/980 million yuan. This is a slight premium compared to leading retail brands (price-earnings ratios of 25 times/22 times, respectively). Oriental Choice's profit compound annual growth rate from FY2026 to FY2028 is expected to be about 25%, which is far higher than the average of 10% in the same industry.