Investment Rating - The report maintains an "Accumulate" rating for the company with a target price of RMB 25.60 [6][7]. Core Views - The company has shown improvement in profit quality and is expected to benefit from a recovery in the industry [1]. - The color sorting machine business is experiencing rapid growth, while the revenue from dental medical equipment has reached a bottom [2]. - The gross profit margin for CBCT has rebounded, and the overall net profit margin has stabilized [3]. - There has been a significant improvement in cash flow, with net cash flow from operating activities increasing by 125% year-on-year [4]. - The company is optimistic about the growth potential of its color sorting machine business and the recovery of the CBCT business, maintaining profit forecasts for 2025 [5]. Summary by Sections Financial Performance - In H1 2025, the company achieved revenue of RMB 1.023 billion, a year-on-year increase of 9.92%, and a net profit of RMB 303 million, up 11.34% year-on-year [1]. - The gross profit margin for the first half of the year was 52.14%, with a net profit margin of 29.61%, reflecting a year-on-year increase of 1.26 percentage points and 0.38 percentage points, respectively [3]. Business Segments - The color sorting machine business saw a revenue increase of 15.2% year-on-year, while the medical equipment segment experienced a slight decline of 0.5% [2]. - The company has made significant strides in digital transformation within the dental medical sector, with over 10,000 users on its "Meiya Meiya" digital health platform by the end of June [2]. Cash Flow and Working Capital - The net cash flow from operating activities reached RMB 393 million, which is higher than the net profit, marking the first time since 2017 that this has occurred [4]. - Accounts receivable and inventory decreased year-on-year, indicating improved operational efficiency and industry leverage [4]. Profit Forecast and Valuation - The company forecasts net profits of RMB 700 million, RMB 744 million, and RMB 789 million for 2025, 2026, and 2027, respectively [5]. - The report assigns a PE ratio of 32 times for 2025, reflecting a target price adjustment based on comparable company valuations [5].