Core Viewpoint - The company reported stable performance in 1H25 with a slight decline in revenue but an increase in net profit, indicating resilience in its business model and growth potential in specific segments [1][2]. Financial Performance - In 1H25, the company achieved revenue of 11.722 billion yuan, a year-on-year decrease of 0.3% - The net profit attributable to shareholders was 880 million yuan, reflecting a year-on-year increase of 10.3% - The non-recurring net profit was 857 million yuan, up 9.1% year-on-year, with a corresponding non-recurring net profit margin of 8.1% [1]. Business Development Trends - The company experienced noticeable growth in its franchise business, with total revenue from retail and franchise/distribution businesses at 10.199 billion yuan and 2.912 billion yuan respectively, showing a decline of 1.9% and 0.2% year-on-year [2]. - Online sales revenue reached 1.35 billion yuan, marking a 5% increase year-on-year, with O2O and B2C sales contributing 940 million yuan and 410 million yuan respectively [2]. - The company maintained a focus on regional strategies, with a total of 14,701 stores (including 4,020 franchise stores) by the end of 1H25, despite closing 272 stores [2]. Operational Efficiency - The company implemented digital operations to enhance efficiency, introducing automated systems for logistics and inventory management [2]. - The net profit margin improved to 8.1%, an increase of 0.8 percentage points year-on-year, attributed to cost control and operational improvements [3]. Profit Forecast and Valuation - The profit forecast for 2025 and 2026 is set at 1.75 billion yuan and 2.04 billion yuan respectively, with the current stock price reflecting a P/E ratio of 16.6x for 2025 and 14.3x for 2026 [4]. - The target price is maintained at 37.6 yuan, suggesting a potential upside of 56.8% from the current stock price [4].