Core Viewpoint - The company reported strong financial performance for the first half of 2025, with revenue and net profit showing significant year-on-year growth, indicating a robust business trajectory and potential for future expansion [1][2]. Financial Performance - In H1 2025, the company achieved revenue of 822 million yuan, representing a year-on-year increase of 12.50% [1][2]. - The net profit attributable to shareholders was 235 million yuan, up 24.55% year-on-year, while the net profit excluding non-recurring items reached 226 million yuan, reflecting a growth of 20.94% [1][2]. - The gross margin and net margin for H1 2025 were 60.11% and 28.58%, respectively, showing improvements of 309 basis points and 277 basis points compared to the previous year [2]. Business Segments - The raw material pharmaceutical business exhibited rapid growth, with revenue in H1 2025 reaching 700 million yuan, a year-on-year increase of 24.68% [3]. - Key product categories such as cardiovascular, respiratory, women's health, nervous system, and anti-infection raw materials showed steady growth, while new products in the peptide and oligonucleotide segments contributed to sales growth [3]. Future Outlook - The company anticipates continued growth in key products like Dydrogesterone, Abiraterone, and others, alongside new product launches expected to drive revenue increases over the next 3-5 years [2][4]. - The company is focusing on expanding hospital coverage for Dydrogesterone, with 1,754 new hospital additions in H1 2025, leading to a sales revenue of approximately 95.7 million yuan, a 3.5% increase year-on-year [2]. Investment Recommendations - The company is expected to maintain high growth rates in the coming years due to the ongoing expansion of existing products and the commercialization of potential blockbuster products [4]. - Revenue forecasts for 2025-2027 have been adjusted to 1.777 billion, 2.154 billion, and 2.591 billion yuan, respectively, with corresponding EPS estimates revised to 1.15, 1.47, and 1.84 yuan [4].

Investment Rating - Industry Rating: Outperform the Market (maintained rating) [4] Core Insights - The pharmaceutical raw material sector showed a preliminary trend of marginal stabilization and recovery in Q1 2025, with key characteristics including the stabilization of raw material prices, integration of formulations, and the transition to new business models [1][2][3] Summary by Sections Raw Material Prices - After a year of continuous price decline in 2024, some raw material prices in Q1 2025 have shown signs of stabilization, with year-on-year declines but month-on-month increases for certain products. Companies have indicated that products with significant price drops in 2024 are stabilizing or increasing in price in 2025. The overall theme for 2024 was to exchange price for volume, while 2025 is expected to enter a phase of stable prices and increased volume [1] Formulation Integration - Companies like Tianyu Co. have experienced growth in Q1, partly due to the expansion of formulation product lines and the renewal of national procurement contracts. For companies with annual revenue below a certain threshold (e.g., 500 million), the rapid growth of formulation business is expected to significantly contribute to profits within the next 2-3 years [2] New Business Transition - Traditional raw material business margins have been shrinking due to intense competition. Therefore, expanding into innovative businesses is essential for the transformation of raw material companies. Companies are beginning to see returns from new business ventures, such as innovative drugs and complex formulations, with examples including Huahai Pharmaceutical's new monoclonal antibodies and Aorite's small nucleic acid technology platform [3]