Runben Biotechnology (SH:603193) Xin Lang Cai Jing·2025-10-21 00:26Core Viewpoint - The company reported a revenue of 1.24 billion yuan for the first three quarters of 2025, representing a year-on-year increase of 19.3%, while the net profit attributable to shareholders was 270 million yuan, up 2.0% year-on-year. However, the net profit excluding non-recurring items decreased by 1.8% year-on-year to 250 million yuan, indicating a slight decline in profitability despite revenue growth [1]. Group 1: Financial Performance - Q3 revenue reached 340 million yuan, a year-on-year increase of 16.7%, but the net profit attributable to shareholders fell by 2.9% to 79 million yuan, and the net profit excluding non-recurring items decreased by 7.6% to 74 million yuan, slightly below expectations due to slowing growth in the baby and child product category and increased sales expenses [1][2]. - The gross margin improved by 1.4 percentage points year-on-year to 59.0%, attributed to product mix optimization. However, the sales expense ratio increased by 5.5 percentage points to 29.1%, driven by a higher revenue share from Douyin and increased costs associated with new product launches [2]. - The net profit margin and net profit margin excluding non-recurring items decreased by 4.6 percentage points and 5.7 percentage points year-on-year to 22.9% and 21.7%, respectively, indicating a decline in profitability [2]. Group 2: Market Trends and Growth Potential - The mosquito repellent category experienced rapid growth, with Q3 revenue of 132 million yuan, a year-on-year increase of 49%, accounting for 39% of total revenue. This growth is likely driven by increased demand due to the chikungunya virus outbreak and a low base effect [1]. - The company is optimistic about the long-term growth potential in the domestic baby care and mosquito repellent sectors, particularly with the upcoming peak season for baby skincare products. Key products such as the egg yolk oil series and moisturizing anti-chapping series are expected to continue gaining traction [3]. - The company benefits from its own supply chain system and efficient online operations, which, combined with capacity expansion and new product development, provide significant growth opportunities [3]. Group 3: Profit Forecast and Valuation - Due to intensified competition leading to increased online traffic costs, the company has revised its net profit forecasts for 2025 and 2026 down by 9% and 14% to 310 million yuan and 370 million yuan, respectively. The current stock price corresponds to a P/E ratio of 37x for 2025 and 31x for 2026 [4]. - The target price has been adjusted down by 9% to 36.4 yuan, reflecting a P/E ratio of 48x for 2025 and 40x for 2026, indicating a potential upside of 30% [4].