20260813-招银国际-多点数智-02586.HK-1H26_review_Accelerating_AI_transformation_5页_1mb

Dmall Inc (2586 HK) Summary

Core Content and Key Highlights

Dmall Inc (2586 HK) reported its first-half of 2026 (1H26) results, showing a total revenue growth of 7% YoY to RMB1.15bn. This growth decelerated from the 20% YoY increase in FY25, primarily due to a decline in revenue from lower-margin AI retail value-added services (VAS). However, the company's adjusted net profit surged by 53% YoY to RMB118mn, driven by AI-enhanced operating efficiency.

Main Business Performance

• AI Retail Core Solution: Delivered a strong 24% YoY revenue growth to RMB647mn, contributing 56% of total revenue. Independent customers accounted for 60% of this segment's revenue, up from 48% in 1H25.
• AI Retail VAS: Revenue declined by 9% YoY to RMB508mn (44% of total revenue), attributed to reduced demand for labor outsourcing as solutions mature.
• Overseas Markets: Showed robust growth of 85% YoY to RMB141mn, representing 12% of total revenue, driven by partnerships with customers like DFI retail and Cold Storage Singapore.

AI Transformation Strategy

Dmall is accelerating its AI transformation and developing three major retail AI agents:

1. AI Merchandise Agent: Focused on key merchandise decisions such as product introduction, delisting, and pricing adjustments.
2. AI Store Agent: Capable of tasks like shelf insights, display analysis, and loss prevention.
3. AI Data Insight Agent: Equipped with capabilities such as cross-module operational data integration, anomaly attribution analysis, and operational early warning.

The company plans to establish a diversified commercialization model that includes platform licensing, agent subscriptions, scenario packages, compute credits, and outcome-based approaches to fully capture value from its AI solutions.

Operating Efficiency and Margins

• Adjusted net margin improved by 3 percentage points (ppt) YoY to 10.2% in 1H26.
• Per capita efficiency reached RMB956k, up 19% YoY, thanks to AI implementation.
• Management expects further margin expansion and healthy earnings growth in 2H26E with continued AI integration.

Financial Forecasts and Valuation

Revenue Forecast (RMB mn)

Adjusted Net Profit (RMB mn)

Valuation

• Target Price: HK$10.00, based on a 3.0x FY26E EV/sales multiple (previous: HK$10.80).
• Implied EV: RMB7,163mn.
• Equity Value: RMB8,031mn.
• Attributable Equity Value: HK$9,248mn.
• Number of Shares: 922mn.
• Valuation Multiple: On par with the average EV/sales of China SaaS peers.

Analyst Recommendations and Risk Factors

• Recommendation: Maintain BUY.
• Risks:
  • Macro headwinds impacting IT budgets.
  • Intensifying competition in China's software sector.
  • Relatively high revenue contribution from related parties.

Shareholding and Market Data

• Shareholding Structure:

  • Celestial: 47.8%
  • Vigorous Link: 8.5%

• Stock Data:

  • Market Cap: HK$5,057.8mn
  • 52-week High/Low: HK$11.75 / HK$5.14
  • Current Price: HK$5.52
  • 12-mth Price Performance: Up/Downside 81.3%

Profitability and Efficiency Metrics

• Gross Margin: Improved from 35.0% in 2023A to 38.1% in 2026E.
• Operating Margin: Increased from (16.6%) in 2023A to 10.5% in 2026E.
• Adj. Net Profit Margin: Rose from (14.7%) in 2023A to 10.2% in 2026E.
• ROE: Increased from 18.3% in 2025A to 20.7% in 2026E.
• Per Capita Efficiency: RMB956k in 1H26, up 19% YoY.

Analyst Certifications and Disclaimers

• The research analyst certifies that the views expressed are based on personal analysis and not influenced by compensation.
• No conflicts of interest are disclosed.
• CMBIGM does not provide individually tailored investment advice.
• The report is for informational purposes only and should not be considered as investment advice.

CMBIGM Ratings

• BUY: Stock with potential return of over 15% over next 12 months.
• HOLD: Stock with potential return of +15% to -10% over next 12 months.
• SELL: Stock with potential loss of over 10% over next 12 months.
• NOT RATED: Stock not rated by CMBIGM.
• OUTPERFORM: Industry expected to outperform the relevant broad market benchmark.
• MARKET-PERFORM: Industry expected to perform in-line with the benchmark.
• UNDERPERFORM: Industry expected to underperform the benchmark.

Legal and Regulatory Disclosures

• The report is prepared for the use of intended recipients only.
• It may not be reproduced, reprinted, sold, redistributed, or published without prior written consent.
• CMBIGM is not a registered broker-dealer in the United States or Singapore.
• In the UK, the report is only for persons within specific regulatory categories.

Conclusion

Dmall is transitioning from traditional retail VAS services to AI retail services, focusing on AI product innovation and commercialization. Despite a slowdown in revenue growth, the company is showing improved profitability and efficiency, supported by AI implementation. The analyst remains optimistic about long-term AI retail opportunities and maintains a BUY recommendation, with a revised target price of HK$10.00.