Investment Rating - The report maintains an "Outperform" rating for the company, indicating a positive outlook on its performance relative to the market [2][9]. Core Insights - The company reported a strong performance in H1 2025, with revenue reaching RMB 17.087 billion, a year-on-year increase of 10.6%, and a net profit of RMB 1.287 billion, up 33.2% year-on-year, exceeding expectations [9]. - The upward revision of profit forecasts is attributed to the decline in raw material prices, improved capacity utilization, and cost optimization, with projected net profits for 2025-2027 being RMB 2.315 billion, RMB 2.579 billion, and RMB 2.843 billion respectively, reflecting year-on-year growth rates of 25%, 11%, and 10% [9]. - The company is recognized as an industry leader, with its food business driving structural upgrades in instant noodles and its beverage segment expanding its multi-category layout [9]. Financial Data and Profit Forecast - Revenue projections for the company are as follows: - 2023: RMB 28.591 billion - 2024: RMB 30.332 billion - 2025E: RMB 32.364 billion - 2026E: RMB 34.473 billion - 2027E: RMB 36.580 billion - The expected growth rates for revenue are 1.2%, 6.1%, 6.7%, 6.5%, and 6.1% respectively [3][10]. - Net profit forecasts are as follows: - 2023: RMB 1.667 billion - 2024: RMB 1.849 billion - 2025E: RMB 2.315 billion - 2026E: RMB 2.579 billion - 2027E: RMB 2.843 billion - The projected year-on-year growth rates for net profit are 36.4%, 11.0%, 25.2%, 11.4%, and 10.2% respectively [3][10]. Business Segment Performance - The food segment achieved a revenue of RMB 5.382 billion in H1 2025, with an 8.8% year-on-year growth, driven primarily by the instant noodle business [9]. - The beverage segment reported a revenue of RMB 10.788 billion, reflecting a 7.6% year-on-year increase, with notable growth in tea, juice, and milk tea categories [9]. Margin and Cost Efficiency - The company achieved a gross margin of 34.32% in H1 2025, an increase of 0.48 percentage points year-on-year, driven by lower raw material costs and improved capacity utilization [9]. - The sales expense ratio decreased to 22.08%, down 1.17 percentage points year-on-year, due to optimized expense management [9].

Core Viewpoint - The company reported a decline in revenue and net profit for 2024, but showed improvement in profitability in Q1 2025, indicating a potential recovery in earnings despite ongoing revenue pressures [1][2]. Financial Performance - For 2024, the company's revenue, net profit attributable to the parent, and net profit excluding non-recurring items were 7.1 billion, 900 million, and 750 million yuan, respectively, reflecting year-on-year declines of 9%, 2%, and 12% [1] - In Q4 2024, the figures were 2 billion, 280 million, and 240 million yuan, with year-on-year changes of -11%, +6%, and -14% [1] - In Q1 2025, the revenue, net profit attributable to the parent, and net profit excluding non-recurring items were 1.5 billion, 140 million, and 90 million yuan, showing year-on-year changes of -6%, +17%, and -15% [1] - Domestic and overseas sales for 2024 were 6.4 billion and 700 million yuan, both down 9% year-on-year [1] - The company plans to distribute a cash dividend of 9.0 yuan per 10 shares, totaling 670 million yuan, with a payout ratio of 73.8% [1] Profitability Metrics - Gross margins for 2024 and Q1 2025 were 39.3% and 36.3%, with year-on-year changes of +0.04% and -1.32 percentage points, respectively, primarily due to a decrease in terminal prices [2] - The expense ratios for sales, management, R&D, and financial expenses in 2024 were 18.2%, 4.7%, 4.3%, and -0.7%, with year-on-year changes of +0.8%, +0.64%, -1.09%, and +0.68 percentage points [2] - The net profit margin for 2024, Q4 2024, and Q1 2025 were 12.7%, 13.9%, and 9.5%, with year-on-year changes of +0.87%, +2.25%, and +1.83 percentage points, indicating a peak in profitability for 2024 [2] Investment Outlook - The company is a leader in the general lighting industry, with a product range covering low, mid, and high-end markets, and continues to innovate [3] - Retail channels are being upgraded, and distribution channels are expanding, enhancing single-store productivity [3] - The commercial lighting business is focusing on expanding market share in key projects, while e-commerce is transitioning towards mid-to-high-end operations [3] - The company is actively exploring new business areas and regions overseas, as well as expanding product categories like wall-mounted and bathroom heaters [3] - Projected net profits for 2025 and 2026 are 950 million and 1.03 billion yuan, with corresponding EPS of 1.28 and 1.38 yuan, leading to PE ratios of 13.7 and 12.7 times [3]