Investment Rating - The report indicates a positive investment outlook for the nutrition functional food industry, highlighting its rapid growth and potential opportunities [4][13]. Core Insights - The nutrition functional food industry in China is experiencing rapid development, with a market size projected to reach CNY 2,331 billion in 2024 and CNY 3,499 billion by 2029, reflecting a compound annual growth rate (CAGR) of 8.5% from 2024 to 2029 [4][13]. - The overall nutrition health food market is expected to grow from CNY 5,223 billion in 2024 to CNY 7,203 billion by 2029, with a CAGR of 6.6% [4][13]. - The industry is supported by national strategies and increasing consumer demand for health and wellness products, driven by factors such as economic growth, rising incomes, and an aging population [4][13]. - The industry value chain includes upstream raw material suppliers, midstream manufacturers and brand operators, and downstream distributors and consumers [22][4]. Summary by Sections Market Overview - The nutrition functional food market is rapidly expanding, with significant growth potential due to increasing health awareness among consumers and supportive government policies [4][13]. - The market is characterized by a diverse range of products, including health snacks, weight management, sports nutrition, and beauty nutrition, with health snacks being the largest segment [19][4]. Industry Chain Analysis - The industry chain consists of raw material suppliers, manufacturers, and brand operators, with companies like Wuxi Jinghai focusing on upstream raw materials and Hengmei Health as a leading contract manufacturer [41][4]. - Wuxi Jinghai holds a market share of over 30% in the amino acid raw material sector, while Hengmei Health leads the contract manufacturing market with a 4.2% share [41][4]. Financial Performance - Wuxi Jinghai reported a revenue of CNY 2.03 billion in the first half of 2025, with a year-on-year growth of 18.67%, and a net profit of CNY 37.3 million, reflecting a 34.77% increase [42][44]. - Hengmei Health's performance has shown fluctuations, with revenue and net profit growth rates experiencing declines in recent periods [41][44]. Consumer Insights - The per capita consumption of nutrition functional foods in mainland China is CNY 166 in 2024, which is lower than in countries like the USA and Japan, indicating room for growth [21][26]. - The report emphasizes the need for improved consumer awareness and product differentiation to enhance market penetration [21][22].

Investment Rating - The report maintains an "Outperform" rating for the company [2][8]. Core Insights - The company reported a revenue of 562 million yuan for H1 2025, a year-on-year increase of 10.9%, but a significant decline in net profit by 67.9% to 15 million yuan [5][8]. - The Q2 2025 revenue was 369 million yuan, reflecting a 4.3% year-on-year growth, while net profit dropped by 91.3% to 3 million yuan, indicating that revenue met market expectations but profits fell short [5][8]. - The company aims to improve profitability in H2 2025 through various measures, including increasing the sales proportion of high-margin products and enhancing cost management [8]. Financial Data and Profit Forecast - The company’s total revenue projections for 2025-2027 are adjusted to 1.28 billion yuan, 1.61 billion yuan, and 2.05 billion yuan respectively, with corresponding net profits of 95 million yuan, 112 million yuan, and 151 million yuan [7][8]. - The gross margin for H1 2025 was reported at 32.2%, a decrease of 9.3 percentage points year-on-year, while the net margin was 2.7%, down 6.6 percentage points [8]. - The company’s earnings per share (EPS) for 2025 is projected at 0.77 yuan, with a price-to-earnings (PE) ratio of 28 [7][8]. Business Performance - The core business segments showed varied performance, with sports nutrition products growing by 24.7% year-on-year, while military supply and other segments faced declines [8]. - The company’s protein muscle gain products generated 327 million yuan in revenue for H1 2025, a 29.1% increase, despite overall market challenges [8]. - The energy supplement segment is expanding, with a notable 9.2% increase in revenue from energy gels [8]. Strategic Outlook - The company plans to enhance its product structure and cost management to counteract declining net profit margins [8]. - New channel development and market expansion efforts are underway to adapt to the evolving sports nutrition consumer landscape [8].