China Merchants Securities: From self-operation to platform two-wheel drive, the first to give Xiyin-W (00625) “Highly Recommended” Rating
The Zhitong Finance App learned that China Merchants Securities released a research report saying that Xiyin-W (00625) is the world's largest online fashion retail company. Starting with its own operation, gradually expanding the third-party platform model has become a new growth driver. The company pioneered a large-scale automated small-order quick return model, empowering small and medium-sized garment manufacturers, using algorithms to build an efficient and fast reverse supply chain, and solve the pain points of traditional industries. The company's adjusted net profit for 2026-2028 is estimated to be US$1.22 billion, US$1.89 billion, and US$2.17 billion, respectively, for the first time, covered with a “Highly Recommended” rating.
The main views of China Merchants Securities are as follows:
Xiyin is the world's largest online fashion retail company. It uses algorithms to organize the supply chain to provide products and services to approximately 273 million active customers in 160 markets around the world
The company was founded in 2012, founded the main brand SHEIN in 2013, pioneered the “large-scale automated small order quick return (LATR)” model in 2014, and officially launched a third-party shopping mall (platform) model in 2023. In 2025, the company's revenue was US$41.85 billion (+8% YoY), of which 89% of revenue came from product revenue, 60% of revenue from Europe and America, and 64% of revenue from the clothing category; net profit of US$2.06 billion (-39% YoY), adjusted net profit of US$1.82 billion (+62% YoY) after excluding changes in the fair value of preferred shares.
Pioneering the LATR model to create an efficient supply chain
Xiying pioneered the LATR model, which effectively solved the industry's three dilemmas and achieved a balance between diverse product choices, new design speed, and inventory management efficiency. As of 26Q1, the company's products include 2 million+ clothing styles, and consumers can discover an average of 4,700 new styles every day in Q1. It is possible to quickly launch the first order of the product in small batches and complete the replenishment within 5 days as fast as 5 days. (1) Front-end supply: Empower small and medium-sized garment manufacturers to ensure quick response efficiency. The successful operation of the LATR model enables intelligent transformation of the supply chain, the scale advantage of sales, and user feedback on the retail side to feed back upstream suppliers to reduce costs and increase efficiency. (2) Back-end fulfillment: Accelerate overseas warehouse construction, avoid risks & optimize execution timelines. The era of duty-free cross-border parcels between Europe and the US has come to an end, and the construction of overseas warehouses has become inevitable. The company continues to build local warehouses around the world, gradually shifting from cross-border direct mail to an overseas warehouse+local fulfillment model. As of June 30, 2026, the company's overseas warehouses accounted for 32%, and more than 90% of orders were delivered within 10 working days after delivery.
Cross-border e-commerce industry
The online rate continues to rise, and various platforms are mispositioned. The global market is 4.6 trillion US dollars, but there is still considerable room for e-commerce penetration in many regions; among them, fashion is the category with the largest scale of online sales. In the competitive landscape, traditional integrated platforms such as Amazon still have the advantage of scale, while emerging platforms quickly gain customers through price power, category, and user focus.
The global fashion industry
The market space is broad and the pattern is scattered, and SHEIN has entered the leading global camp. The global market is 1.74 trillion US dollars, and the online penetration rate has increased to 35%; during the same period, the industry pattern was highly fragmented, and SHEIN ranked third with a 1.9% share. Compared with traditional fast fashion brands, SHEIN focuses on young female customers and uses the online DTC+LATR model to achieve high gross profit and high turnover advantages.
Risk warning: Industry competition increases risks, tariff and trade policy changes risks, overseas business compliance risks, supply chain and inventory risks, etc.