Kouzijiao(SH:603589) KAIYUAN SECURITIES·2025-08-22 06:16Investment Rating - The investment rating for the company is "Accumulate" (maintained) [1] Core Views - The company's Q2 performance showed a significant decline, with total revenue of 7.21 billion yuan, down 48.5% year-on-year, and net profit of 1.05 billion yuan, down 70.9% year-on-year. This decline was greater than expected, leading to a downward revision of profit forecasts for 2025-2027 [4][5] - Despite the challenges, there is still potential for improvement in the company's organizational capabilities and channel development, justifying the "Accumulate" rating [4] Financial Performance Summary - For H1 2025, the company achieved total revenue of 25.31 billion yuan, a decrease of 20.1% year-on-year, and a net profit of 7.15 billion yuan, down 24.6% year-on-year [4] - The company's revenue and profit forecasts for 2025-2027 are adjusted to 9.8 billion yuan (-6.9%), 11.0 billion yuan (-6.4%), and 12.1 billion yuan (-6.0%) respectively, with corresponding EPS of 1.64 yuan (-1.14), 1.84 yuan (-1.05), and 2.02 yuan (-0.99) [4] - The current stock price corresponds to P/E ratios of 21.2, 18.9, and 17.2 for the years 2025, 2026, and 2027 respectively [4] Product and Market Analysis - The revenue decline is attributed to demand pressure and a high base from the previous year due to new product launches. In Q2 2025, revenue from high-end, mid-range, and low-end products was 6.57 billion yuan (-49.6%), 0.12 billion yuan (-7.7%), and 0.29 billion yuan (+7.5%) respectively [5] - Revenue from domestic and foreign markets in Q2 was 5.15 billion yuan (-54.0%) and 1.83 billion yuan (-18.6%) respectively, with a significant decline in the domestic market due to strict policy enforcement affecting consumption scenarios [5] Cash Flow and Inventory Management - In Q2 2025, the company's cash sales were 10.58 billion yuan, down 24.1% year-on-year, which was better than revenue performance. The company's contract liabilities at the end of Q2 were 2.98 billion yuan, an increase of 0.28 billion yuan quarter-on-quarter [6] - The company maintains relatively low channel inventory, and the number of domestic and foreign distributors increased by 25 each in Q2 [6] Profitability Metrics - The gross margin in Q2 2025 decreased by 9.9 percentage points to 65.2%, primarily due to restrictions on mid-range products and a significant decline in product structure [7] - The net profit margin decreased by 11.18 percentage points to 14.51% [7] Financial Summary and Valuation Indicators - The company's financial indicators for 2023A to 2027E show a projected revenue decline in 2025E to 4.482 billion yuan (-25.5%), with a recovery expected in subsequent years [8] - The projected net profit for 2025E is 980 million yuan (-40.8%), with a gradual recovery to 1.207 billion yuan by 2027E [8] - The gross margin is expected to decline to 66.1% in 2025E, with a gradual recovery to 70.2% by 2027E [8]