Yanghe(SZ:002304) KAIYUAN SECURITIES·2025-08-22 08:42Investment Rating - The investment rating for the company is "Outperform" (maintained) [1] Core Views - The company is actively reducing inventory and is expected to see operational improvements in the future. Despite significant revenue and profit declines in the first half of 2025, the company's brand strength and consumer base remain intact, making future reforms promising [5][6] Financial Performance Summary - In H1 2025, the company achieved revenue of 14.796 billion, a year-on-year decline of 35.32%, and a net profit attributable to shareholders of 4.344 billion, down 45.34%. Q2 revenue was 3.729 billion, down 43.67%, with net profit of 707 million, a decline of 62.66% [5] - The company has adjusted its profit forecasts for 2025-2026, now expecting net profits of 4.763 billion (-57.6%), 4.907 billion (-61.8%), and 5.159 billion for 2027, with year-on-year changes of -28.6%, +3.0%, and +5.1% respectively [5] - The current stock price corresponds to P/E ratios of 22.8, 22.2, and 21.1 for 2025, 2026, and 2027 respectively [5] Product and Regional Performance - The mid-to-high-end product segment saw a revenue decline of 36.5% to 12.67 billion, while ordinary liquor revenue fell by 27.2% to 1.84 billion. The decline in the mid-to-high-end segment is attributed to decreased demand for the company's main product line [6] - Revenue from the domestic market was 7.12 billion, down 25.8%, while revenue from outside the province was 7.39 billion, down 42.7%, indicating a more significant decline in external markets [6] Contract Liabilities and Cash Flow - As of the end of H1 2025, contract liabilities stood at 5.88 billion, an increase of 1.94 billion year-on-year but a decrease of 1.15 billion quarter-on-quarter. Q2 sales cash receipts were 2.57 billion, down 48%, aligning with revenue trends [7] Profitability Metrics - Q2 gross margin was relatively stable at 73.3%, down 0.4 percentage points year-on-year. However, the sales expense ratio increased by 2.3 percentage points due to fixed advertising and personnel costs amid declining revenue. The net profit margin fell significantly by 9.6 percentage points to 18.9% [8] - The company’s gross margin is projected to remain around 73% for the next few years, with net margins expected to recover slightly by 2027 [10]