Core Viewpoint - The company reported a strong performance in the first half of 2025, with revenue and net profit growth aligning with expectations, driven by a recovery in the Hong Kong market and strategic channel expansions [1][2]. Financial Performance - Revenue for 1H25 reached HKD 762 million, a year-on-year increase of 14.6% - Net profit attributable to shareholders was HKD 235 million, corresponding to earnings per share of HKD 0.28, up 6.9% year-on-year [1] - The gross profit margin stood at 60.8%, a decrease of 7.2 percentage points year-on-year [2] Market Trends - The Hong Kong market showed a robust recovery, with revenue of HKD 430 million, up 30.3% year-on-year, attributed to an increase in store count and product sales [1] - The mainland China market generated HKD 120 million in revenue, reflecting a modest growth of 1.4% year-on-year [1] - Overseas market revenue was HKD 210 million, down 2.6% year-on-year, primarily due to currency fluctuations [1] Cost Management - The sales expense ratio decreased to 13.5%, down 5.9 percentage points year-on-year, due to reduced retail terminal costs and marketing activities [2] - The management expense ratio increased slightly to 11.6%, up 0.4 percentage points year-on-year [2] Operational Metrics - Accounts receivable turnover days increased by 14 days to 173 days [2] - Inventory turnover days rose by 54 days to 923 days, attributed to strategic raw material reserves [2] - Accounts payable turnover days decreased by 37 days to 35 days [2] Strategic Initiatives - The company is actively promoting its traditional Chinese medicine products and culture, engaging in various cultural promotion activities [2] - There is a focus on deepening R&D innovation and expanding the product line to create new growth engines [2] Profit Forecast and Valuation - The net profit forecasts for 2025 and 2026 have been revised down by 5.2% to HKD 535 million and HKD 589 million, respectively, with expected growth rates of 7.0% and 10.0% [2] - The current stock price corresponds to a P/E ratio of 14.9x for 2025 and 13.5x for 2026, with a target price of HKD 10.50, indicating a potential upside of 10.3% [2]

Group 1 - The core viewpoint of the report is that Tong Ren Tang Guo Yao (03613) is maintaining an outperform rating due to its proactive expansion of online and offline sales channels, with a target price of HKD 10.50, indicating a potential upside of 10.3% from the current stock price [1] - The company reported a revenue of HKD 762 million for the first half of 2025, representing a year-on-year increase of 14.6%, and a net profit attributable to shareholders of HKD 235 million, corresponding to an earnings per share of HKD 0.28, which is a 6.9% increase year-on-year, aligning with expectations [1] Group 2 - In the Hong Kong market, the company achieved a revenue of HKD 430 million in the first half of 2025, a year-on-year increase of 30.3%, driven by the expansion of product sales through increased store presence and renovations of retail outlets [2] - The revenue from the mainland China market was HKD 120 million, reflecting a year-on-year growth of 1.4%, while overseas market revenue reached HKD 210 million [2] - The company is actively exploring international market development through a strategic partnership with China Duty Free Group and is enhancing product appeal through packaging updates [2] Group 3 - The gross profit margin for the first half of 2025 was 60.8%, a decrease of 7.2 percentage points year-on-year, while the sales expense ratio decreased to 13.5%, down 5.9 percentage points, primarily due to reduced retail terminal costs and marketing activities [3] - The management expense ratio was 11.6%, reflecting a year-on-year increase of 0.4 percentage points [3] Group 4 - The accounts payable turnover days decreased by 37 days to 35 days in the first half of 2025 [4] - The company is actively promoting traditional Chinese medicine products and culture, engaging in various cultural promotion activities [4] - The report suggests that the company is expected to drive high-quality development through deepening research and innovation strategies, continuously enriching its product line, and expanding its proprietary product matrix [4]