Guitarfetish parts are perfect for a project like this. They are cheap enough that you aren't sinking a ton of money into an already cheap guitar, and are nice enough (given you don't buy their cheapest stuff) that you feel like you've made worthwhile improvements to that cheap guitar.
The biggest thing I'd say is to replace that wraparound bridge with one that has individual adjustable saddles. The way it sits now, intonation is always a compromise, and that's just not a good design from a performance perspective.
After that, the best upgrades you can make to a guitar like this are fretwork and a better nut. Assuming it still has the factory nut and fretwork, it's virtually a guarantee that they are shoddy, and you just won't be able to get it playing as well as it can without addressing those first. That's the big thing people tend to miss while upgrading cheap guitars and why they often end up unsatisfied with the results.
And finally after tackling those issues, then I would start looking into other parts like pickups and tuning machines. There are lots of options on GFS that are both cheap and decent, it's up to you to choose what you like. Check out some sound samples and the like. If you're trying to add a coil split, just make sure whatever pickup you get has four conductor wiring and get a push-pull pot if you don't want to drill any holes, though I much prefer mini toggle switches. If you're trying to add a second pickup, well that is very in-depth for a guitar like this. Doing it yourself will be a nightmare if you don't have experience, and paying someone to do it will cost more than the guitar is worth.