Core Viewpoint - The report from Zheshang Securities indicates that Kang En Bei's revenue growth rates for Q1-Q3 2025 are projected to be -7.64%, +3.04%, and +10.42% year-on-year, showing continuous improvement quarter-on-quarter [1] Group 1: Revenue Performance - The significant drag on the company's performance in the first half of 2025 is primarily due to the high base effect from the flu season in the first half of 2024, particularly affecting the "Jin Di" brand of compound Houttuynia cordata syrup and other respiratory medications [1] - In contrast, digestive and metabolic medications such as Chang Yan Ning achieved a year-on-year growth of 16.51% in the first half of 2025 [1] Group 2: Future Outlook - Looking ahead to Q4 2025 and 2026, it is expected that with the normalization of flu data and the ongoing deepening of the mixed reform process, along with the steady advancement of the brand focus strategy, brand products are likely to see stable growth [1] - National sentinel hospital data indicates an increase in flu-like cases in both northern and southern provinces since late October 2025, surpassing the levels of the same period in 2024, which is expected to benefit the company's core business [1] Group 3: Product Impact and Strategy - The company's core products, including the "Kang En Bei" Chang Yan Ning series and "Jin Di" compound Houttuynia cordata series, are OTC products that are less affected by centralized procurement price reductions [1] - As the proportion of specialty health consumer products continues to rise, the impact of centralized procurement is expected to diminish [1] - The company maintains an "Overweight" rating [1]

Investment Rating - The report maintains a "Buy" rating for the company, with a 6-month target price of 59.5 CNY, compared to the closing price of 48.58 CNY on April 23, 2025 [6][12]. Core Insights - The company achieved a revenue of 4.465 billion CNY and a net profit of 394 million CNY in 2024, representing year-on-year growth of 19.15% and 68.89% respectively. The first quarter of 2025 saw revenues of 1.1 billion CNY and net profits of 91 million CNY, with year-on-year increases of 25.4% and 62% [3][12]. - The company's strategy of focusing on staple food products has led to significant revenue growth, with overseas revenue expected to reach 3.051 billion CNY in 2024, accounting for 68.33% of total revenue, a year-on-year increase of 14.62% [3][12]. - The company is expanding its overseas production capacity, particularly in the U.S. and Canada, with the second phase of the U.S. factory expected to be operational by 2026. This expansion is anticipated to enhance profitability [3][12]. Financial Summary - Revenue projections for 2025-2027 are 5.284 billion CNY, 6.3 billion CNY, and 7.659 billion CNY respectively, with net profits expected to be 503 million CNY, 635 million CNY, and 826 million CNY [2][12]. - Earnings per share (EPS) are projected to grow from 1.34 CNY in 2025 to 2.80 CNY by 2027, indicating a strong upward trend in profitability [2][12]. - The company’s gross margin is expected to improve from 28.2% in 2024 to 31.6% in 2027, reflecting enhanced operational efficiency [2][12].