Investment Rating - The investment rating for the company is "Hold" [5] Core Views - The company has shown resilience in the face of tariff fluctuations, maintaining a relatively high capacity utilization rate in both domestic and Vietnamese factories, which has helped sustain its main business profits despite a 6.73% year-on-year decline in sales [2] - The company is focusing on product innovation and brand enhancement, implementing a strategy that emphasizes product differentiation, quality standardization, and cost advantages, while continuously upgrading production lines and dyeing processes to improve product quality [3] - The financial forecast has been adjusted, with expected revenues for 2025-2027 projected at 8.2 billion, 8.7 billion, and 9.2 billion yuan, respectively, and net profits expected to be 620 million, 690 million, and 780 million yuan, respectively [4] Financial Performance Summary - In Q2 2025, the company achieved revenue of 1.86 billion yuan, a year-on-year decrease of 13.7%, while net profit attributable to shareholders was 217 million yuan, an increase of 42.03% [1] - For the first half of 2025, the company reported revenue of 3.59 billion yuan, down 9.99% year-on-year, with a net profit of 390 million yuan, up 67.53% [1] - The company plans to distribute a cash dividend of 0.15 yuan per share, with a cash dividend payout ratio of 57.67% [1] Product and Market Strategy - The company is actively exploring emerging market clients and adjusting sales strategies to ensure order fulfillment in both domestic and international markets [2] - The focus on brand development includes scaling patented products and enhancing brand value through a strategy of small batches, diverse varieties, and quick delivery [3]

Core Viewpoint - The company reported a significant improvement in net profit despite a decline in revenue, indicating effective sales strategy adjustments and capacity utilization [4][5]. Financial Performance - In the first half of 2025, the company achieved revenue of 3.59 billion yuan, a year-on-year decrease of 10.0%, while net profit attributable to shareholders was 390 million yuan, a year-on-year increase of 67.5% [4]. - The basic earnings per share (EPS) was 0.26 yuan, with a proposed cash dividend of 0.15 yuan per share, resulting in a payout ratio of 58% [4]. - The gross profit margin increased by 5.2 percentage points to 15.2%, with a quarterly breakdown showing margins of 14.9% and 15.5% for Q1 and Q2 respectively [6]. Sales and Production Insights - The company's main product, yarn, saw a sales volume decline of 6.7% in the first half of 2025, with estimated prices remaining stable [5]. - Revenue from the Vietnamese subsidiary accounted for 79% of total revenue, amounting to 2.83 billion yuan, a decrease of 8.4%, while net profit from this segment increased by 39.2% [5]. Inventory and Cash Flow - Inventory increased by 10% year-on-year to 4.67 billion yuan, with inventory turnover days rising to 263 days, an increase of 39 days [7]. - Operating cash flow decreased by 95.6% to 40 million yuan, primarily due to a reduction in revenue and an increase in raw material procurement costs [7]. Market Outlook - The company is expected to benefit from its strategic positioning in Vietnam amidst potential tariff impacts from the U.S., with a continued focus on enhancing efficiency and cost management [8].