Investment Rating - The investment rating for Giant Biogene Holding is "Buy" with a 12-month price target of HK$71, representing an upside of 31.7% from the current price of HK$53.90 [12]. Core Insights - Despite recent uncertainties, Giant Biogene has reiterated its FY25 guidance, expecting sales and net income to grow by 25-28% and 21-24% year-on-year, respectively, with projected figures of RMB6.9-7.1 billion in sales and RMB2.5-2.6 billion in net income [1][3]. - The company is focusing on customer acquisition and retention through enhanced marketing strategies, including increased sample gifts and differentiated product bundles [10]. - Management anticipates a gradual recovery in KOL livestreaming, which has been a significant factor in recent sales pullbacks, and plans to enhance consumer trust through transparency initiatives [1][10]. Summary by Sections Financial Performance - FY25 guidance remains unchanged with sales expected to be between RMB6.9-7.1 billion and net income between RMB2.5-2.6 billion, reflecting a year-on-year growth of 25-28% and 21-24% respectively [1][3]. - The stock is currently trading at 20x 2025E PE based on the company's guidance, which is considered attractive given the expected recovery in the latter half of FY25 [2]. Sales Drivers - The company has reported strong performance in offline sales channels, with 1H25 growth exceeding initial expectations, and minimal impact from recent allegations on overall sales [9][10]. - Specific sales initiatives include increasing sample gifts and providing exclusive benefits to enhance customer loyalty [10]. Market Position and Strategy - Giant Biogene is actively working on improving brand perception through transparency initiatives, public welfare activities, and partnerships with medical institutions [10]. - The approval processes for medical aesthetics (MA) are proceeding smoothly and are not expected to be affected by recent uncertainties [10].

Core Viewpoint - The ongoing conflict between Juzi Biotechnology and Huaxi Biotechnology over collagen protein content has significantly impacted Juzi's stock price, which has dropped over 64% in the past month due to allegations of false advertising and quality issues [5][7]. Group 1: Company Developments - On June 23, Juzi Biotechnology acknowledged limitations in the quality standards and testing methods of its collagen products, which are not meeting the evolving industry demands [1]. - The controversy began on May 17 when Huaxi Biotechnology criticized the market's perception of hyaluronic acid versus collagen protein, indirectly targeting Juzi's products [7]. - Following a report by influencer "Big Mouth Doctor" on May 24, which claimed Juzi's collagen product contained only 0.0177% collagen, significantly below the regulatory threshold, Juzi's market value plummeted by nearly 12 billion HKD in a single day [7][8]. Group 2: Market Impact - Juzi's flagship product, "Kefumei," experienced a drastic drop in sales rankings during the 618 shopping festival, falling from 3rd to 12th place on Tmall within a short period [8]. - Bank of America downgraded Juzi's target price from 92.7 HKD to 79 HKD due to the controversy, while maintaining a "buy" rating based on potential approvals for its injectable aesthetic products later in the year [8]. - Huaxi Biotechnology also faced challenges, with its main brand Quadi disappearing from the top 20 on Tmall, indicating a mutual decline in market performance for both companies [8].

Core Viewpoint - The company acknowledges limitations in its current quality standards, testing methods, and labeling for recombinant collagen products, and has announced three standardization upgrade measures to address these issues [2]. Group 1: Company Response - The company has conducted a comprehensive self-inspection of its recombinant collagen raw materials and products, revealing that existing quality standards and testing methods are increasingly inadequate to meet high industry standards and technological advancements [2][3]. - The company commits to three specific actions: collaborating with research institutions to optimize verification methods, proactively disclosing raw material and finished product data, and participating in the formulation of national standards [2]. Group 2: Background of the Controversy - The controversy regarding recombinant collagen content originated from a May 24 article by "Dr. Big Mouth," which claimed that the collagen content in the company's product "胶原棒1.0" was only 0.0177%, significantly below the labeled threshold of 0.1% [3]. - In response, the company cited industry standard YY/T 1947-2025, asserting that its products contain "greater than 0.1%" collagen, and criticized the testing method used by the opposing party as unverified and unreliable [3]. - The company's flagship product, the "recombinant collagen essence," generated revenue of 4.54 billion yuan in 2024, accounting for 82% of the group's total income [3].

Summary of the Conference Call for Juzi Biotechnology Company Overview - **Company**: Juzi Biotechnology - **Industry**: Biotechnology and Cosmetics Key Points and Arguments 1. Transparency and Consumer Trust - Juzi Biotechnology plans to enhance transparency by inviting consumers to visit factories and film production processes to rebuild trust following recent public sentiment issues [2][4][8] - The company will conduct interactive activities such as bottle recycling and collaborate with clinical research institutions to strengthen its medical background and credibility [2][6] 2. Product Quality and Standards - The company is addressing challenges in detecting recombinant collagen in cosmetics by collaborating with research institutions to optimize detection methods and participate in the establishment of industry standards [5][6] - Juzi Biotechnology emphasizes that all products are produced according to registered formulas and processes, ensuring compliance with cosmetic technical requirements [3] 3. Sales Strategy Post-Pandemic - Following the pandemic, the company plans to adjust its sales strategies, including resuming collaborations with influencers to regain market share [7][10] - The sales strategy will focus on three dimensions: acquiring new customers, maintaining existing customers, and enhancing product presentation [10] 4. Performance and Growth Expectations - The company reported that offline sales channels performed well in the first half of the year, with growth across hospitals, pharmacies, and CSK channels, slightly exceeding initial targets [11] - During the 618 shopping festival, Juzi Biotechnology ranked second in Tmall's domestic beauty sales, with core products performing well despite a temporary increase in return rates [12] 5. Financial Impact of Public Sentiment - The profit margin remained unaffected in the first half of the year, as the decline in online sales was offset by higher offline margins [13] - The company anticipates that increased marketing and promotional activities will be necessary to restore consumer confidence, but these costs will be manageable and not significantly alter the overall expense ratio [13] 6. Product Development and Market Position - Juzi Biotechnology's other core products, primarily Class II medical devices, have not been significantly impacted by public sentiment and continue to grow rapidly in offline sales [14] - The company is actively promoting new products, including the upgraded "Big Devil" cream, and plans to continue its marketing efforts in 2025 [15] Additional Important Information - The company is committed to scientific communication to enhance consumer understanding of its 20+ years of R&D capabilities and technical expertise [6][8] - Juzi Biotechnology aims to establish a strong presence in both public and private hospital channels, leveraging professional endorsements to build brand trust [8]

Investment Rating - The report maintains the full-year performance guidance unchanged for Giant Biogene, indicating confidence in the company's ability to recover revenue growth in the latter half of the year [10][11]. Core Insights - The recombinant collagen industry is in its early development stage, lacking unified testing and quality standards, which affects the accuracy of testing results [2][7]. - The company experienced a controllable impact on its online business during the 618 sales period, with sales of its Comfy brand ranking second in Tmall's domestic beauty products [8]. - The offline business remained stable, with strong performance in hospitals and pharmacies, unaffected by recent public opinion events [9]. - The company plans to enhance brand communication and consumer trust through various initiatives, including transparent communication and collaboration with research institutions [12]. - Future online marketing strategies will focus on "people, goods, and places," aiming to improve customer engagement and brand exposure [13]. Summary by Sections Business Update - The company discussed recent public opinion events and their impact on operations during the June 24, 2025, meeting [6]. - The online sales of Comfy were initially affected by a public opinion event but returned to normal levels shortly after [8]. - Offline sales of major medical device products remained strong, supporting stable business development [9]. Financial Performance - The profit margin in the first half of 2025 was not adversely affected by public opinion events, with a positive impact from the increase in offline business proportion [11]. - The company is confident in recovering revenue growth in the third and fourth quarters through refined operations and continuous investment [10]. Future Strategies - The company aims to strengthen brand and consumer communication to enhance trust and loyalty [12]. - Marketing efforts will include differentiated offerings for new and existing customers, leveraging the professionalism of medical devices [13].

Core Viewpoint - The article discusses the ongoing dispute between two major players in the beauty industry, Juzi Biotechnology and Huaxi Biotechnology, focusing on Juzi's acknowledgment of limitations in their collagen product standards and their plans for improvement [2][8]. Group 1: Juzi Biotechnology's Response - Juzi Biotechnology admitted that their current quality standards, testing methods, and labeling have limitations that do not fully meet the high standards and requirements of industry development and technological advancement [2][8]. - The company plans to collaborate with research institutions to accelerate the optimization and validation of qualitative and quantitative testing methods for recombinant collagen in cosmetics [8]. - Juzi will gradually disclose key technical parameters and quality control data for raw materials and finished products to empower industry development and accept public supervision [8]. Group 2: Industry Standards and Developments - The latest industry standard for recombinant collagen dressings, YY/T 1947-2025, is set to be implemented in March 2026, indicating a need for updated compliance among companies [6]. - Juzi Biotechnology emphasized the necessity for continuous optimization and iteration of their quality standards and methods in response to the rapid development of the recombinant collagen industry and increasing consumer quality demands [8]. Group 3: Huaxi Biotechnology's Position - Huaxi Biotechnology previously addressed concerns regarding the lack of relevant testing standards in the recombinant collagen field, highlighting the misuse of the term "collagen" in the market [9]. - They criticized the misleading use of the term "collagen" by some companies, which do not produce the actual collagen sequence and structure, thus lacking physiological functionality [9]. - Huaxi believes that clear and scientifically verifiable conclusions are essential to avoid prolonged disputes and help companies resolve their issues quickly [9].

Core Viewpoint - The ongoing controversy regarding the content of recombinant collagen products from Giant Bio (02367.HK) remains unresolved, with the company not directly addressing anonymous criticisms from testing agencies [1][2]. Group 1: Company Response and Actions - On June 23, Giant Bio acknowledged the limitations of its current quality standards and announced a technical improvement plan in response to market discussions about its recombinant collagen products [2][3]. - The company has conducted a comprehensive self-inspection of its production, testing, and packaging processes, and is validating different testing methods to address recent controversies [3]. - Giant Bio plans to collaborate with research institutions to optimize qualitative and quantitative testing methods for cosmetic recombinant collagen, and will gradually disclose key technical parameters and quality control data [3][4]. Group 2: Industry Standards and Market Impact - Giant Bio has been a pioneer in the recombinant collagen field since applying for a patent in 2001, and it adheres to various industry standards that have been implemented from 2021 to 2025 [3]. - The company's recent statement led to a rebound in its stock price, although it has experienced significant volatility over the past month, dropping from a high of 85.14 HKD on May 20 to 54.6 HKD by June 24 [4]. - The company's market capitalization has decreased by nearly 30 billion HKD from its previous peak, now standing at 584.7 billion HKD [5].

Core Viewpoint - The 2025 New Fortune 500 Rich List reveals a significant increase in the total market value of listed entrepreneurs, reaching 13.7 trillion yuan, an 11% year-on-year growth, indicating a new wave of wealth creation driven by innovation and overseas expansion [3][14]. Group 1: Wealth Distribution and Rankings - The top ten wealthiest individuals are heavily influenced by AI, with Zhang Yiming of ByteDance topping the list with a holding value of 481.57 billion yuan, marking a 42% increase from the previous year [4][18]. - The list features a notable shift, with four individuals from Hangzhou, Zhejiang, highlighting the region's growing economic prominence [43]. - The average holding value of the 500 entrepreneurs is 273.8 million yuan, with a threshold of 66.2 million yuan to make the list [8]. Group 2: Industry Insights - The TMT (Technology, Media, and Telecommunications), pharmaceutical, and daily consumer goods sectors are the top three wealth-generating industries, contributing 110, 54, and 52 individuals respectively [51]. - The TMT sector saw a significant increase in wealth, with a total of 334.08 billion yuan, a 46% increase from the previous year [51]. - The pharmaceutical sector experienced a decline, with 54 individuals listed, down from 64, indicating ongoing valuation adjustments [51]. Group 3: AI and Technological Advancements - AI has emerged as a key driver of wealth creation, with companies like DeepSeek and ByteDance leading the charge in user engagement and valuation [4][21]. - The rise of AI has also led to a resurgence in the semiconductor industry, with China exporting 2.981 billion chips worth approximately 159.5 billion USD, marking a significant shift in the global market [56]. - The AI sector is still in its nascent stage, with notable entries like Liang Wenfeng of DeepSeek entering the top ten, reflecting the rapid growth and potential of AI applications [60]. Group 4: Regional Wealth Creation - Wealth creation is becoming more balanced across regions, with western provinces like Sichuan, Tibet, and Xinjiang seeing an increase in listed individuals, while traditional economic hubs like Zhejiang and Shanghai continue to grow [5][6]. - The shift from real estate to technology and AI reflects a broader transformation in China's economic landscape, with younger entrepreneurs increasingly dominating the wealth rankings [46][45]. Group 5: Future Outlook - The ongoing evolution of industries, particularly in AI and technology, suggests a promising future for innovation-driven wealth creation in China [60][62]. - The integration of AI into various sectors, including automotive and consumer electronics, is expected to further enhance China's competitive edge in the global market [62][63].

Core Viewpoint - The company, Xi'an Juzhi Biological Gene Technology Co., Ltd. (referred to as "Juzhi Biological"), has issued a statement addressing controversies surrounding its recombinant collagen product, Kefu Mei, emphasizing its commitment to quality standards and ongoing improvements in response to industry developments [1][2]. Group 1: Company Background and Standards - Juzhi Biological applied for the first domestic invention patent related to recombinant collagen in 2001, naming the innovative substance "human-like collagen" and applying for the "human-like" trademark [1]. - The company has accumulated over 20 years of technical expertise, transitioning the substance from laboratory research to industrial application [1]. - Multiple industry standards related to recombinant collagen have been established, including the 2021 "Guidelines for Naming Recombinant Collagen Biological Materials" and the 2022 medical industry standard YY/T 1849-2022 [1]. Group 2: Quality Control and Self-Inspection - The company claims that its product development and production adhere to established standards, implementing quality control measures for raw materials and products [2]. - In response to the controversies, Juzhi Biological conducted a comprehensive self-inspection of all production, testing, and labeling processes, validating different testing methods [2]. - The company acknowledged limitations in its existing quality standards and testing methods, indicating a need for continuous optimization to meet evolving industry standards [2]. Group 3: Controversy and Response - The controversy began when a beauty blogger accused Juzhi Biological's Kefu Mei product of ingredient fraud, claiming the actual collagen content was only 0.0177% [3]. - Juzhi Biological refuted these claims, stating that their testing results showed collagen content exceeding 0.1%, contradicting the blogger's assertions [3]. - The dispute centers on differing testing methods, with both parties accusing each other of using "unscientific" approaches, as there are currently no national standards for testing recombinant collagen in cosmetics [3]. Group 4: Market Impact - As of June 23, Juzhi Biological's total market value was HKD 54.83 billion, reflecting a nearly 40% decline from its peak on May 20 [4].

Core Viewpoint - The company has issued a statement regarding the standards and developments related to recombinant collagen products, highlighting the need for continuous improvement in quality standards and testing methods to meet industry demands and consumer expectations [1][2]. Group 1: Industry Standards - In 2021, the guideline for naming recombinant collagen biomaterials was published and implemented [1] - In 2022, the pharmaceutical industry standard YY/T 1849-2022 for recombinant collagen was published and implemented [1] - In 2023, the pharmaceutical industry standard YY/T 1888-2023 for recombinant humanized collagen was published and implemented [1] - In 2023, the group standard T/ZGKSL 004-2023 for recombinant collagen raw materials used in cosmetics was published and implemented [1] - In 2025, the pharmaceutical industry standard YY/T 1947-2025 for recombinant collagen dressings is set to be published, with implementation in March 2026 [1] Group 2: Company Response and Actions - The company has conducted a comprehensive self-inspection of all aspects of production, testing, and labeling in response to recent discussions about the recombinant collagen content in its products [1] - The company acknowledges the limitations of its current quality standards, testing methods, and labeling, which need to be optimized to align with industry advancements and high consumer expectations [2] - The company plans to collaborate with research institutions to accelerate the optimization and validation of qualitative and quantitative testing methods for recombinant collagen in cosmetics [2] - The company aims to gradually disclose key technical parameters and quality control data for raw materials and finished products to empower industry development and accept public supervision [2] - The company will continue to participate in the formulation of national and industry standards related to recombinant collagen in cosmetics to promote standardized industry development [2]