Core Viewpoint - The key highlight of Jiachi Technology (688708.SH) in the first half of the year is its stealth function structural components business, which has shown significant growth despite a slight decline in overall revenue [1][4]. Revenue Performance - In Q2, the company's revenue reached 213 million yuan, a quarter-on-quarter increase of 225.98%, although total revenue for the period showed a slight year-on-year decline [1]. - The sales revenue from stealth function structural components was 199 million yuan, representing a 96.18% increase compared to the same period in 2024, and accounted for 71% of total revenue [3]. - The revenue structure shifted, with stealth function coating materials contributing 25.8% to total revenue, down from previous levels [3]. Cost and Profitability - The total operating cost, including "four expenses," was 180 million yuan, an increase of 29.33% year-on-year [6]. - The decline in revenue combined with rising costs led to a significant drop in profits, with net profit attributable to the parent company decreasing by approximately 46.5% [7]. - The gross profit margins for stealth function coating materials and structural components fell to 68.2% and 76.4%, respectively, compared to 75.4% and 81.14% in 2024 [7]. Research and Development - Jiachi Technology's R&D expenses grew by 88% to 70.97 million yuan, accounting for 25.47% of total revenue, which is significantly higher than the median of 12.5% among listed companies on the Sci-Tech Innovation Board [8]. - The number of ongoing R&D projects increased from 50 to 77, focusing primarily on aerospace applications, with some projects related to naval vessels and unmanned aerial vehicles [9]. - The company has made substantial investments in R&D, with a projected total investment of 375 million yuan for R&D projects in 2025, indicating a commitment to maintaining high R&D intensity for future growth [9].

Investment Rating - The report does not explicitly state the investment rating for Yatsen Holding (YSG US) Core Insights - Yatsen Holding's revenue for Q2 2025 reached 1.09 billion yuan, a year-on-year increase of 36.8%, driven by strong performance in skincare brands and stable growth in color cosmetics [2][10] - The gross profit for Q2 2025 was 850 million yuan, reflecting a 39.5% year-on-year increase, with a gross profit margin of 78.3%, up 1.6 percentage points from the previous year [2][10] - The company expects Q3 2025 net revenue to be between 790 million yuan and 880 million yuan, representing a year-on-year growth of approximately 15% to 30% [2][10] Revenue Performance - Skincare brands contributed significantly, with net revenue increasing by 78.7% year-on-year to 580 million yuan, accounting for 53.5% of total revenue [2][10] - The three core skincare brands saw revenue growth of 88.1%, while color cosmetics brands experienced an 8.8% increase, with the Perfect Diary brand returning to growth [2][10] Expense Management - Total operating expenses for Q2 2025 were 910 million yuan, a year-on-year increase of 21.7%, but the operating expense ratio decreased by 10.3 percentage points to 83.4% [3][11] - Fulfillment expenses were 63.29 million yuan, with a fulfillment expense ratio of 5.8%, down 0.6 percentage points year-on-year [3][11] - Sales and marketing expenses were 720 million yuan, with a sales and marketing expense ratio of 66.5%, down 2.1 percentage points year-on-year [3][11] Profitability - Operating loss for Q2 2025 narrowed to 55.48 million yuan, down from 135 million yuan in the same period last year, with an operating loss margin of 5.1% [4][12] - Non-GAAP net profit turned positive at 11.5 million yuan, compared to a non-GAAP net loss of 74.89 million yuan in the previous quarter [4][12] Strategic Outlook - The company is confident in maintaining a balance between growth and profitability, particularly in high-end skincare brands which typically yield higher gross margins [5][13] - Yatsen has been actively investing in R&D, establishing a world-class R&D center in Shanghai to enhance its competitive advantage [5][13] Brand Development - Continuous investment in product R&D and brand building has led to strong performance, with flagship products like the VC serum and innovative offerings in color cosmetics [6][14] - The company is expanding its offline presence with experience stores in major cities to enhance brand influence and consumer interaction [6][14]