Core Viewpoint - The company reported a decline in revenue and net profit for Q1 2025, with revenue at 1.79 billion yuan, down 32.3% year-on-year, and net profit at 455 million yuan, down 37.44%, which aligns with expectations [1]. Revenue Performance - Q1 2025 revenue was 1.79 billion yuan, with major brands experiencing significant declines: main brand down 36.4%,健力多 down 46.2%, and lifespace down 36.2% due to high base effects from the previous year and ongoing challenges in foot traffic at pharmacies [2]. - The company maintained a focus on channel health, reducing inventory compared to the previous year, and expects Q1 revenue to account for a lower proportion of annual revenue than the 38% seen last year [2]. - Online revenue showed a 5.94% increase year-on-year, driven by stable performance in probiotics and cross-border e-commerce [2]. - Offline channel revenue decreased by 43% year-on-year, while online channel revenue decreased by 16%, with the decline rate narrowing [2]. Profitability and Cost Management - The gross margin for Q1 2025 was 68.7%, down 1.2 percentage points year-on-year, primarily due to an increase in low-margin products and the impact of declining revenue on scale effects [2]. - Sales expenses decreased by 34% year-on-year, with the sales expense ratio down by 0.9 percentage points, reflecting strict cost control measures [2]. - Overall profit margin declined by 1.1 percentage points but remained stable [2]. Strategic Initiatives - The company is implementing multiple strategies to drive sales growth, including reshaping the value chain for basic nutrition products and launching new products in collaboration with chain pharmacies [3]. - The introduction of specialized, high-value products and a focus on online channels through high-end product upgrades and brand recognition initiatives are expected to contribute to revenue growth starting in Q2 [3]. - The company anticipates that the most challenging period has passed, with revenue and profit expected to improve quarter by quarter [3]. Earnings Forecast and Valuation - Due to pressure in offline channels, the earnings forecast for 2025 and 2026 has been revised down by 6% to 830 million yuan and 980 million yuan, respectively [4]. - The company is currently trading at 22.5/19.0 times P/E for 2025/2026, with a target price of 12.6 yuan, implying a potential upside of 15.4% [4]. - The long-term potential in the health supplement sector is recognized, maintaining an outperform rating [4].