Yanghe(SZ:002304) Bank of China Securities·2025-08-26 00:01Investment Rating - The investment rating for the company is "Buy" [1][4][6] Core Views - The company is undergoing a deep adjustment phase, with financial statements being cleaned up, and is expected to gradually emerge from this bottom adjustment period as channel health improves [4][6][9] - The company reported a significant decline in revenue and net profit for the first half of 2025, with revenue of RMB 14.8 billion, down 35.3% year-on-year, and net profit of RMB 4.34 billion, down 45.3% year-on-year [4][10] - The company is focusing on core products and inventory reduction strategies to alleviate channel pressure, with a notable decrease in the number of distributors impacting revenue [9][10] Financial Performance Summary - For 1H25, the company achieved revenue of RMB 14.8 billion, a decrease of 35.3% year-on-year, and a net profit of RMB 4.34 billion, a decrease of 45.3% year-on-year [4][10] - In 2Q25, revenue was RMB 3.73 billion, down 43.7% year-on-year, and net profit was RMB 707 million, down 62.7% year-on-year [10] - The company’s gross margin for 1H25 was 75.0%, a decrease of 0.3 percentage points year-on-year [10] Valuation and Forecast - The company plans to distribute a total cash dividend of no less than 70% of net profit for the years 2024 to 2026, with a minimum of RMB 7 billion (including tax) [6] - The projected net profit for 2025 is RMB 4.32 billion, with a year-on-year decline of 35.3%, followed by a recovery in 2026 with an expected net profit of RMB 4.60 billion, representing a growth of 6.5% [6][8] - The current market capitalization corresponds to a price-to-earnings ratio (PE) of 25.2X for 2025, 23.7X for 2026, and 21.9X for 2027 [6][8]