Core Viewpoint - China Wangwang's stock has dropped over 4%, currently trading at 4.7 HKD, with a trading volume of 31.12 million HKD. UBS reports that for the first half of the 2026 fiscal year, revenue grew by 2.1% year-on-year to 11.1 billion RMB, while net profit fell by 7.8% to 1.7 billion RMB, indicating a mixed performance with revenue meeting expectations but profit falling short due to increased operating expenses [1][1][1] Financial Performance - Revenue for the first half of the 2026 fiscal year reached 11.1 billion RMB, reflecting a year-on-year growth of 2.1% [1] - Net profit decreased by 7.8% year-on-year to 1.7 billion RMB [1] - Gross margin declined by 1.1 percentage points to 46.2%, while net profit margin fell by 1.7 percentage points to 15.5% [1] Operational Insights - Operating expenses increased by 10.6% year-on-year, primarily due to higher advertising and promotional costs [1] - Management indicated that sales performance in October and November was weaker compared to last year, attributed to the later timing of the 2026 Lunar New Year [1] Future Outlook - Management expects gross margin to remain stable in the second half of the fiscal year, with potential improvements next year as the cost of imported milk powder is anticipated to decline from current high levels [1] - Concerns were raised regarding the impact of expanding into emerging and discount snack channels, which may boost sales and penetration but could weaken pricing power and increase channel costs, posing long-term pressure on profit margins [1] - There are worries about weak demand in the dairy beverage category and competition from e-commerce platform subsidies [1]