Core Insights - The company reported a revenue of 2.6 billion yuan for the first three quarters of 2025, a year-on-year decrease of 7.3% [1] - Net profit attributable to shareholders was 140 million yuan, down 17.2% year-on-year, with a basic EPS of 0.14 yuan [1] Revenue Breakdown - The cosmetics segment saw a revenue decline of 8%, while the Yilian brand showed strong growth, and the Ai'er Doctor brand is still undergoing adjustments [2] - For the first three quarters of 2025, the cosmetics segment accounted for 60% of total revenue, with a year-on-year decline of 8.2% [2] - The pharmaceutical and raw materials segments accounted for 12% and 11% of revenue, respectively, with year-on-year changes of -17.5% and +11.2% [2] - The Yilian brand generated 790 million yuan in revenue, representing 30% of total revenue and a year-on-year increase of 19.5% [2] - The Ai'er Doctor brand generated 650 million yuan, accounting for 25% of revenue, with a year-on-year decline of 28.9% [2] - The Kemi brand is in a growth phase, achieving revenue of 77.19 million yuan in the first three quarters [2] Profitability and Expenses - Gross margin for the first three quarters of 2025 decreased by 0.4 percentage points to 51.5% [3] - The gross margins for cosmetics, pharmaceuticals, and raw materials were 61.2%, 52.3%, and 40.3%, respectively, with year-on-year changes of -1.1, +1.8, and +0.9 percentage points [3] - The expense ratio increased by 0.8 percentage points to 44.7%, with sales, management, R&D, and financial expense ratios at 36.4%, 4.9%, 4.5%, and -1%, respectively [3] Other Financial Metrics - Inventory as of September 2025 decreased by 20.3% year-on-year to 480 million yuan, with a turnover period of 119 days [4] - Accounts receivable increased by 2.5% year-on-year to 460 million yuan, with a turnover period of 45 days [4] - The company reported an asset impairment gain of 60,000 yuan, compared to a loss of 4.75 million yuan in the previous year [4] - Operating net cash flow was 40 million yuan, a decrease of 37% year-on-year [4] Future Outlook - The company maintains an "overweight" rating despite weak short-term demand and ongoing adjustments in the Ai'er Doctor brand [4] - Profit forecasts for 2025-2027 have been revised down to 210 million, 250 million, and 310 million yuan, reflecting decreases of 28%, 26%, and 19% from previous estimates [4] - Corresponding PE ratios for 2025 and 2026 are projected to be 38 and 32 times, respectively [4]

Investment Rating - The investment rating for the company is "Accumulate" [1] Core Views - The report indicates that the Yilian brand is experiencing good growth momentum, while the Ai'er Doctor brand is still undergoing adjustments [5][9] - The company reported a revenue of 2.6 billion yuan for the first three quarters of 2025, a year-on-year decrease of 7.3%, with a net profit attributable to shareholders of 140 million yuan, down 17.2% year-on-year [5][9] - The cosmetics segment saw a revenue decline of 8%, with the Yilian brand achieving a revenue of 790 million yuan, a year-on-year increase of 19.5%, while the Ai'er Doctor brand's revenue was 650 million yuan, down 28.9% [6][9] Financial Performance Summary - For the first three quarters of 2025, the company's quarterly revenues were 880 million, 910 million, and 810 million yuan, with year-on-year changes of -1.6%, -11.7%, and -8% respectively [5] - The gross margin for the first three quarters of 2025 decreased by 0.4 percentage points to 51.5% [7] - The company's inventory as of September 2025 decreased by 20.3% year-on-year to 480 million yuan, while accounts receivable increased by 2.5% to 460 million yuan [8] Profitability and Valuation Metrics - The company’s projected net profit for 2025 is 210 million yuan, with a corresponding PE ratio of 38 times [10][11] - The report forecasts a decline in net profit for 2025-2027, with estimates of 210 million, 252 million, and 314 million yuan respectively [10][11] - The return on equity (ROE) is projected to be 5.0% for 2025, increasing to 6.9% by 2027 [13]

Core Viewpoint - The skincare brand Rehyadro under Huaxi Biological has faced operational stagnation, with its online stores cleared of products, indicating a strategic shift by the company to focus on its main brands [1][5][6]. Group 1: Brand Operations - Consumers have reported that the Rehyadro flagship store is no longer available, and products such as hyaluronic acid sprays have been taken down from various online platforms [1][3]. - Rehyadro, which focuses on collagen-based skincare products, has multiple series targeting different age groups and skincare needs, including anti-wrinkle and moisturizing lines [2]. - The official flagship store on Douyin has 180,000 followers and a total sales volume of 425,000, but currently shows "products being shelved" [5]. Group 2: Company Response and Strategy - Huaxi Biological stated that Rehyadro is not a major brand for the company, and the adjustments are part of a strategy to concentrate on core businesses [1][6]. - The company has undergone significant changes, including renaming its personal health consumer goods line to "Skin Science Innovation Transformation Line" and restructuring its team and brand positioning [7][8]. Group 3: Financial Performance - Huaxi Biological's functional skincare business saw a revenue decline of 18.45% in 2023, dropping to 3.757 billion, with its share of total revenue decreasing to 61.84% [7]. - The skincare segment's revenue for the first half of the year was 2.261 billion, down 19.57%, with net profit falling 35.38% to 221 million [8]. - The company has significantly reduced brand incubation plans lacking clear technological support, aiming to strengthen the connection between technological achievements and consumer products [8].

Investment Rating - The report adjusts the investment rating for the company to "Accumulate" [1][3] Core Views - The company's Q2 performance was under pressure, with a revenue decline of 3.4% year-on-year and a net profit drop of 71.0% due to a decline in traditional offline channels and increased brand expenses and costs [1][6] - There is an expectation for improvement in domestic sales in July, with contributions from e-commerce, membership supermarkets, and overseas market exploration in countries like Vietnam, Indonesia, and Malaysia anticipated to show results in Q3 and Q4 [1][6] - The company has adjusted its net profit forecasts for 2025-2027 to 240 million, 270 million, and 310 million respectively, with corresponding EPS of 2.53, 2.94, and 3.34, reflecting a 20x PE for 2026 [1][6] Financial Data and Valuation - Total revenue for 2023 is projected at 1,848 million, increasing to 2,802 million by 2027, with a compound annual growth rate of approximately 9% [2][12] - The company’s total market capitalization is 5.4 billion, with a circulating market value of 2.9 billion [3] - The current stock price is 57.86 yuan, with a projected PE ratio of 22.8 for 2025 [3][13] Performance Analysis - In H1 2025, the company reported a revenue of 945 million, down 9.34% year-on-year, and a net profit of 75 million, down 55.2% [6][12] - The sales channels showed mixed results, with e-commerce recovering to a growth of 12.4%, while traditional channels faced significant pressure [6][12] - The gross profit margin for Q2 2025 decreased by 1.6 percentage points to 32.8%, primarily due to rising raw material costs and changes in channel structure [6][12] Future Outlook - The company anticipates a gradual improvement in revenue and profit margins in H2 2025, supported by stable cost conditions and improved sales performance [1][6] - The report emphasizes the importance of brand adjustments and the potential for growth in new product categories and overseas markets [1][6]

Core Viewpoint - Dazzle Fashion Co., Ltd. will close all offline stores of its menswear brand RAZZLE in China by the end of August 2025 due to business adjustments, focusing future efforts on women's clothing [1][2][9] Group 1: RAZZLE Brand Closure - RAZZLE will cease operations and close its micro-store by May 30, 2025, with all offline stores shutting down by August 31, 2025 [2][4] - Consumers can still use their membership cards in physical stores until the closure and can transfer their benefits to DAZZLE membership cards [4] - As of now, RAZZLE's flagship store on JD.com is no longer visible, while its Tmall store remains operational [4] Group 2: Performance Issues - RAZZLE has been underperforming, with a reported revenue of 41.26 million yuan in 2024, a year-on-year decline of 11.79%, accounting for only 1.86% of the group's total revenue [6] - The number of RAZZLE's offline stores decreased from 22 at the end of 2023 to 18 by the end of 2024 [6] - The brand's target demographic is men aged 25 to 40, but it has struggled to gain market traction despite a mid-to-high-end positioning [5][6] Group 3: Overall Company Performance - Dazzle Fashion's total revenue fell by 16.23% to 2.219 billion yuan in 2024, with all brands, including DAZZLE, DIAMOND DAZZLE, and d'zzit, experiencing declines [7][8] - The company closed 243 stores in 2024, resulting in a total of 890 stores, marking the first time since its IPO in 2018 that the number of stores fell below 1,000 [8] - The menswear market in China is undergoing significant changes, with traditional business menswear struggling, leading to increased competition for RAZZLE [8][9]