JZYY(SH:600750) HTSC·2025-08-22 11:12Investment Rating - The report maintains a "Buy" rating for the company [5][7]. Core Views - The company demonstrated resilience in operations despite industry pressures, with a focus on health consumer products and prescription drugs showing growth [2]. - The company is positioned as a leading player in the OTC market for gastrointestinal products in China, with expectations for steady growth through both organic and external means [1]. - The company has implemented cost optimization strategies that have led to improved profitability and stable cash flow [3]. Summary by Sections Financial Performance - For the first half of 2025, the company reported revenues of 2.14 billion RMB, a decrease of 6% year-on-year, while net profit attributable to shareholders was 520 million RMB, an increase of 6% year-on-year [1]. - The second quarter of 2025 saw revenues of 960 million RMB, a decline of 4% year-on-year, but net profit attributable to shareholders increased by 6% to 240 million RMB [1]. - The gross margin for the first half of 2025 was 66.6%, down 2.4 percentage points year-on-year, primarily due to a decrease in the proportion of high-margin OTC business [3]. Business Segments - The OTC segment faced challenges with revenues of 1.55 billion RMB, down 10% year-on-year, while health consumer products grew by 17% to 230 million RMB, and prescription drugs increased by 7% to 360 million RMB [2]. - The company has strengthened its online marketing channels and brand building, which contributed to the growth in health consumer products [2]. Dividend Policy - The company announced a cash dividend of 0.5 RMB per share for the first half of 2025, representing 60.78% of the net profit attributable to shareholders [1][4]. - The company plans to maintain a high dividend payout ratio during the 14th Five-Year Plan period, emphasizing its commitment to shareholder returns [4]. Future Outlook - The company forecasts net profits attributable to shareholders of 897 million RMB, 1.015 billion RMB, and 1.145 billion RMB for 2025, 2026, and 2027, respectively, reflecting growth rates of 14%, 13%, and 13% year-on-year [5]. - The target price for the company's stock is set at 29.96 RMB, based on a 21x PE ratio for 2025 [5].