Core Viewpoint - Despite its significant position in niche markets, the company has disclosed concerning signals in its prospectus, including a notable decline in performance in the first half of 2025 and compliance issues [2][4]. Group 1: Company Performance - In 2024, the company ranked second in both the Chinese goat milk powder market and the infant formula goat milk powder market, as well as second among local brands in the infant special medical food market [4]. - The company's revenue from 2022 to 2024 was 1.402 billion, 1.614 billion, and 1.762 billion RMB, with net profits of 227 million, 168 million, and 172 million RMB respectively [9]. - In the first half of 2025, the company reported revenue of 806 million RMB, a year-on-year decline of 10.4%, and a net profit of 56.7 million RMB, down 42.6% year-on-year [11]. Group 2: Business Segments - The company's main business segments include infant formula goat milk powder, special medical food, infant formula cow milk powder, adult and children's milk powder, and OEM and dairy-related materials [6]. - Infant formula goat milk powder and special medical food are the largest contributors, accounting for 58.6% and 12.4% of revenue in 2024, respectively [7]. Group 3: Profitability and Costs - The company's net profit margin has been declining, with rates of 16.2%, 10.4%, 9.8%, and 7.0% from 2022 to the first half of 2025 [15]. - The increase in sales and distribution expenses has contributed to the declining net profit margin, rising from 17.1% of revenue in 2022 to 28.9% in the first half of 2025 [15]. Group 4: Compliance and Governance Issues - The company has faced compliance issues, including failure to fully pay social insurance and housing funds for some employees, and exceeding the legal limit for dispatched workers [17]. - There are concerns regarding the legality of certain properties owned by the company, which were built without proper planning permits, posing risks of penalties or operational disruptions [17]. Group 5: Research and Development - The company has seen a reduction in R&D investment, with expenses of 19.91 million, 8.42 million, and 8.01 million RMB from 2022 to 2024, representing approximately 1.4%, 0.52%, and 0.45% of revenue respectively [26]. - Despite the growth in the special medical food segment, the company faces uncertainties related to industry regulations, market competition, and its operational capabilities [24].