Investment Rating - The report upgrades the investment rating to "Accumulate" [6][4] Core Insights - The company reported a revenue of 3.89 billion, a year-on-year increase of 5.5%, and a net profit attributable to the parent company of 180 million, up 40.5% year-on-year [1] - The infant formula business saw a decline in domestic sales but significant growth in overseas markets, particularly in goat milk powder, which achieved a revenue increase of 65.7% [1][2] - The company maintains its international market strategy, with goat milk powder expected to continue driving growth, supported by potential improvements in domestic demand due to changing birth policies [1][3] Revenue Breakdown - For the first half of 2025, the revenue from infant formula was 2.83 billion, down 3.8% year-on-year, while cheese and other products saw increases of 51.6% and 7.0%, respectively [2] - Goat milk powder revenue was 1.86 billion, up 3.1%, while cow milk powder revenue decreased by 14.9% [2] - The company achieved a revenue of 2.58 billion in China, down 10.7%, but saw increases in Europe (67.1%), the Middle East (49.4%), and the Americas (67.4%) [2] Profitability Metrics - The gross margin decreased by 1.5 percentage points to 41.9%, with goat milk powder and cow milk powder margins at 55.1% and 52.3%, respectively [3] - The net profit margin increased by 0.7 percentage points to 4.6%, supported by effective cost control measures [3] Earnings Forecast and Valuation - The earnings per share (EPS) estimates for 2025-2027 are adjusted to 0.18, 0.20, and 0.22 RMB, reflecting increases of 13%, 10%, and 7% respectively [4] - The target price is set at 2.97 HKD, based on a 15x price-to-earnings ratio for 2025 [4][7]