Core Viewpoint - The company's performance in Q3 2025 continues to show weakness, primarily due to ongoing macroeconomic consumption demand issues and significant market competition pressures in the "Hi-Body" and regenerative product segments [5]. Financial Performance - For the first three quarters of 2025, the company reported revenue of 1.86 billion, a year-on-year decline of 21.5%, and a net profit attributable to shareholders of 1.09 billion, down 31.0% [4]. - Q1, Q2, and Q3 2025 revenues were 660 million, 640 million, and 570 million respectively, reflecting year-on-year declines of 17.9%, 25.1%, and 21.3%. Net profits for the same quarters were 440 million, 350 million, and 300 million, with year-on-year declines of 15.9%, 41.7%, and 34.6% [4]. Profitability Metrics - The gross margin for the first three quarters of 2025 decreased by 1.4 percentage points to 93.4%, while the net profit margin attributable to shareholders fell by 8.1 percentage points to 58.6%. In Q3 2025, the gross margin was 93.2%, down 1.4 percentage points year-on-year, and the net profit margin was 53.7%, down 11.0 percentage points [6]. - The decline in gross margin is attributed to a lower proportion of high-priced product sales and increased competition from new compliant products in the market [6]. Expense Analysis - The company's expense ratio for the first three quarters of 2025 increased by 12.5 percentage points to 31.8%. The breakdown includes sales, management, R&D, and financial expense ratios of 12.4%, 6.4%, 12.7%, and 0.3%, respectively, with year-on-year increases of 3.7, 2.5, 4.8, and 1.4 percentage points [7]. - In Q3 2025, the expense ratio rose to 38.6%, up 18.2 percentage points year-on-year, with sales, management, R&D, and financial expense ratios at 15.4%, 8.8%, 14.3%, and 0.1%, respectively [7]. Taxation Impact - The company paid 23.3 million in taxes and additional fees for the first three quarters of 2025, reflecting a year-on-year increase of 59.1% due to higher value-added tax payments [8]. Product Development and Market Expansion - The company is progressively enhancing its aesthetic medical product lineup, having launched a new bone filler product "Kola" and completed the acquisition of REGEN Biotech, Inc. to enrich its regenerative product matrix [9]. - The company is also advancing its pipeline for botulinum toxin and semaglutide injection products, and has entered the hair medical market with the registration of minoxidil lotion [9]. - In October, the company completed the filing of a new cosmetic raw material "Glycyrrhizin A," aiming to penetrate the "medical-grade skincare" sector, with expectations for "pharmaceutical-cosmetic synergy" to create new growth avenues [9].

Investment Rating - The report maintains a "Buy" rating for the company [1] Core Views - The company's revenue continues to be under pressure due to macroeconomic factors, with a need for a demand turning point to emerge [5] - The company reported a revenue of 1.86 billion yuan for the first three quarters of 2025, a year-on-year decline of 21.5%, and a net profit of 1.09 billion yuan, down 31.0% year-on-year [4][5] - The gross margin slightly decreased to 93.4% for the first three quarters of 2025, while the net profit margin fell to 58.6% [5] - Increased competition in the market, particularly for high-priced products, has contributed to the decline in revenue and profit margins [5][6] - The company is expanding its product lineup in the medical beauty sector, which may provide new growth opportunities in the future [7][8] Summary by Sections Financial Performance - For Q3 2025, the company reported revenues of 570 million yuan, a decline of 21.3% year-on-year, and a net profit of 300 million yuan, down 34.6% year-on-year [4][5] - The gross margin for Q3 2025 was 93.2%, down 1.4 percentage points year-on-year, while the net profit margin was 53.7%, down 11.0 percentage points year-on-year [5] - The company's expense ratio increased by 12.5 percentage points to 31.8% for the first three quarters of 2025, with significant increases in sales, management, and R&D expenses [6] Market Position and Strategy - The company is enhancing its product offerings in the medical beauty sector, including the launch of new products and acquisitions to strengthen its market position [7] - The introduction of new products and the expansion into overseas markets are expected to drive future growth [8] Earnings Forecast - The net profit forecasts for 2025-2027 have been revised down to 1.39 billion, 1.53 billion, and 1.70 billion yuan, respectively, reflecting a decrease of 15% to 16% [8] - The report projects earnings per share (EPS) of 4.58 yuan for 2025, with corresponding price-to-earnings (P/E) ratios of 36, 32, and 29 for the years 2025, 2026, and 2027 [8][9]