Core Viewpoint - The company reported a mixed performance for the first three quarters of 2025, with a decline in revenue but a significant increase in net profit, indicating a potential recovery in profitability despite challenges in revenue growth [1][3]. Financial Performance - For the first three quarters of 2025, the company achieved revenue of 5.047 billion, a year-on-year decrease of 3.41%, while net profit attributable to shareholders reached 304 million, a year-on-year increase of 385.30% [1]. - In Q3 2025, the company reported revenue of 1.39 billion, down 19.88% year-on-year, but net profit attributable to shareholders was 88.86 million, up 338.68% year-on-year [1]. Segment Analysis - The plant extraction business generated revenue of 766 million in Q3 2025, an increase of 2.82% year-on-year, while the cottonseed business saw revenue drop to 588 million, a decline of 34.59% year-on-year, primarily due to a decrease in unit price [2]. - The plant extraction segment showed strong growth in specific products, with chili red application products' sales up 36% and chili extract market share expanding with sales up 87% [2]. Profitability Metrics - The gross margin for Q3 reached 16.11%, an increase of 10.56 percentage points year-on-year, with the plant extraction business gross margin at 22.26% and cottonseed gross margin at 7.80%, both showing continuous improvement [3]. - The net profit margin for Q3 was 6.39%, up 8.54 percentage points year-on-year, indicating a successful turnaround in profitability [3]. Market Dynamics - Supply of key raw materials for the main products, such as chili red and lutein, has decreased by over 10%, which may alleviate competitive pressures in the industry [4]. - Demand for natural plant extracts is expected to grow rapidly due to increased consumer awareness of food safety and regulatory changes banning synthetic colorants in the U.S. [4]. Future Outlook - The company anticipates continued profit growth in the coming year, supported by expectations of price recovery and increased consumption [4]. - Revenue projections for 2025-2027 are 6.919 billion, 7.759 billion, and 8.480 billion, with net profits of 360 million, 441 million, and 551 million, corresponding to PE ratios of 19X, 16X, and 13X respectively [4].

Investment Rating - The investment rating for the company is not explicitly stated in the provided content, but the report indicates a positive outlook for future profitability and growth [1]. Core Insights - The company reported a revenue of 5.047 billion yuan for the first three quarters of 2025, a year-on-year decrease of 3.41%, while the net profit attributable to the parent company was 304 million yuan, showing a significant increase of 385.30% [1]. - In Q3 2025, the company achieved a revenue of 1.39 billion yuan, down 19.88% year-on-year, but the net profit attributable to the parent company was 88.86 million yuan, up 338.68% year-on-year [1]. - The report highlights a continuous increase in gross margin, with Q3 gross margin reaching 16.11%, up 10.56 percentage points year-on-year [3]. Revenue and Profit Analysis - The plant extraction business generated revenue of 766 million yuan in Q3 2025, an increase of 2.82% year-on-year, while the cottonseed business saw a revenue drop to 588 million yuan, down 34.59% year-on-year [3]. - The gross margin for the plant extraction business was 22.26%, while the cottonseed business had a gross margin of 7.80%, both showing continuous improvement [3]. - The report forecasts revenues of 6.919 billion yuan, 7.759 billion yuan, and 8.480 billion yuan for 2025, 2026, and 2027 respectively, with net profits projected at 360 million yuan, 441 million yuan, and 551 million yuan for the same years [4]. Market Dynamics - The supply of key raw materials for the company's main products, such as chili red and lutein, is expected to decrease by over 10%, which may alleviate competitive pressures in the industry [3]. - The demand for natural plant extracts is anticipated to grow rapidly due to increasing consumer awareness of food safety and regulatory changes in synthetic colorants [3]. - The report suggests that the changes in supply and demand dynamics could lead to a price turning point for products, with industry profitability expected to recover moderately over the next three years [3]. Future Outlook - The company is expected to continue improving profitability next year, with strategic reserves of raw materials at low prices potentially leading to higher profits when prices rebound [3]. - The procurement prices of key raw materials will significantly influence the company's product prices and gross margins in the upcoming year [3].

Core Insights - The mulberry leaf extract industry in China is rapidly developing due to the increasing demand for natural plant extracts and the medicinal and health benefits of mulberry leaves [1][6][22] - China is one of the richest countries in mulberry resources, with a complete industrial chain extending from mulberry cultivation to high-value extracts [1][4] - The market size for mulberry leaf extract is projected to grow from 199.17 million yuan in 2024 to 217.65 million yuan in 2025, with an industry output value expected to reach 300.65 million yuan [1][6] Industry Definition and Classification - Mulberry leaves (Folium Mori) are the dried leaves of the mulberry plant, known for their medicinal properties, including clearing lung heat and improving vision [2] - The main functional components of mulberry leaf extract include polyphenols, flavonoids, alkaloids, and polysaccharides, which are associated with antioxidant capabilities [2][4] Current Development Status - The mulberry leaf extract industry has seen a steady increase in demand due to rising health awareness and preference for natural products, leading to market expansion [4][6] - The production capacity of mulberry leaf extract in China is expected to grow from 834 tons in 2024 to 892 tons in 2025, with production increasing from 563 tons to 598.4 tons [4][6] Industry Chain - The upstream of the mulberry leaf extract industry includes mulberry cultivation and extraction production equipment, with raw material costs accounting for over 90% of the total cost [8][10] - The downstream applications of mulberry leaf extract include pharmaceuticals, cosmetics, health products, and food and beverages [8] Industry Development History - The plant extraction industry in China has a long history, with significant advancements in extraction methods since the 1990s, leading to a golden development period in the 21st century [15] Competitive Landscape - The mulberry leaf extract industry exhibits a clear technological stratification, with leading companies using proprietary technologies to dominate the high-end market [17][19] - Major companies in the industry include Hunan Xier Natural Pharmaceutical Co., Ltd., Hunan Huakang Biotechnology Co., Ltd., and Guilin Rhine Biotechnology Co., Ltd. [17][19] Industry Development Trends - The demand for mulberry leaf extract is expected to grow as consumers increasingly seek natural and healthy products, particularly in the fields of medicine, food, and health supplements [22]

Market Position and Growth Potential - The company's main products, including chili red, chili extract, and lutein, currently hold a leading position in the global market, with significant growth potential ahead [2][3] - The chili red business commands an 80% market share globally, although the gross margin has declined due to high raw material costs in 2023 [8][9] International Expansion and Production Capacity - The company has established overseas production capabilities, including two factories in India and two farms in Zambia, with plans for further expansion in Myanmar [3][4] - The company aims to strategically develop processing capacity based on the growth of raw material bases [3] Financial Performance and Projections - In Q1 2025, the company anticipates a net profit of between 90 million and 120 million yuan, representing a year-on-year increase of 133.21% to 210.95% [4][5] - The herbal medicine business accounted for less than 2% of total revenue in 2024, indicating it is still in the early development stage [4][5] Competitive Advantages - The company has established competitive advantages through a focus on R&D, global layout, multi-product development, and integrated operations over its 20+ years in the plant extraction industry [4][5] - The company has developed a new production process for stevia sugar, achieving a 54% year-on-year revenue growth to 231 million yuan in 2024 [4][5] Industry Trends and Future Outlook - The plant extraction industry is expected to grow at a CAGR of 12.3% from 2022 to 2027, with the market size projected to reach 61.5 billion USD by 2027 [10][11] - The industry is experiencing a trend of increasing volume but decreasing prices, with a 21.3% increase in export volume to 134,000 tons in 2024, while total export value decreased by 7.7% to 3.01 billion USD [10][11]