Investment Insights - The report highlights that the current moment may represent an absolute return starting point for the liquor industry, particularly for baijiu, as fund holdings have dropped to 2017 levels and the food and beverage sector's overweight ratio has decreased significantly from its 2019 peak [2][6][8] - The report suggests that the liquor industry is regaining its cyclical characteristics, with a 72% valuation correction observed since February 2021, indicating a slow adjustment process [6][7] Liquor Industry Analysis - The report indicates that the adjustment process for the liquor industry involves several stages, including a decline in distributor profitability, a decrease in receivables, and a subsequent recovery in genuine demand [7][8] - It is anticipated that the current cycle will see absolute returns earlier than the previous cycle, with the report suggesting that the bottoming out of the cycle will occur when most distributors have cleared their inventories [7][8] Company-Specific Insights: Heng Rui Pharmaceutical - Heng Rui Pharmaceutical reported a total revenue of 15.76 billion yuan for the first half of 2025, marking a year-on-year increase of 15.88%, with a net profit of 4.45 billion yuan, up 29.67% [18][20] - The company has seen a significant increase in innovative drug sales, which accounted for 60.66% of total revenue, with a 21.80% year-on-year growth in innovative drug sales [18][20] - Heng Rui has established a robust pipeline with over 90 innovative products in clinical development, indicating strong potential for future growth [19][20] Company-Specific Insights: Jin Feng Technology - Jin Feng Technology achieved a revenue of 28.54 billion yuan in the first half of 2025, reflecting a 41.3% year-on-year increase, with a net profit of 1.49 billion yuan, up 7.3% [30][33] - The wind power equipment segment saw a significant revenue increase of 71.2%, with total delivery capacity reaching 10.64 GW, a 106.6% year-on-year growth [31][33] - The report projects an upward revision of net profit forecasts for 2025-2027, reflecting a positive outlook for the company's recovery in profitability [33] Company-Specific Insights: Mi Xue Group - Mi Xue Group reported a revenue of 14.875 billion yuan for the first half of 2025, a 39.3% increase year-on-year, with a net profit of 2.718 billion yuan, up 44.1% [4][28] - The company continues to expand its store network, with a total of 53,014 stores, focusing on both domestic and international markets [4][28] - The report emphasizes the company's strong growth potential in both domestic and overseas markets, particularly in Southeast Asia [4][28] Company-Specific Insights: Sanxiang Technology - Sanxiang Technology reported a revenue of 529 million yuan in the first half of 2025, a 22% increase year-on-year, with a net profit of 39.3 million yuan, up 89% [4][22] - The growth in domestic mainframe business significantly contributed to the revenue increase, driven by major clients such as Geely and BYD [22][23] - The report highlights the potential for steady expansion in the automotive industry, particularly in the context of the shift towards new energy and lightweight vehicles [22][23]

Investment Rating - The investment rating for the company is "Buy" (maintained) [5] Core Views - The report highlights that the recovery of equipment gross margins has exceeded expectations, and the overall performance of the complete machine is expected to continue improving [5][7] - The company has shown significant revenue growth in wind power equipment, with a notable improvement in gross margins [7] Financial Performance Summary - For the first half of 2025, the company achieved a revenue of 28.54 billion RMB, representing a year-on-year increase of 41.3%, and a net profit attributable to shareholders of 1.49 billion RMB, up 7.3% year-on-year [7] - Wind power equipment revenue grew by 71.2% year-on-year, with total delivery capacity reaching 10.64 GW, a 106.6% increase [7] - The gross margin for the wind power equipment segment reached 7.97%, a significant increase of 4.22 percentage points compared to the same period last year [7] - As of June 30, the company had external orders totaling 51.8 GW, including 7.4 GW from overseas [7] Earnings Forecast and Valuation - The company’s revenue forecast for 2025-2027 has been revised upwards to 26.6 billion RMB, 38.5 billion RMB, and 44.7 billion RMB respectively, with year-on-year growth rates of 43%, 45%, and 16% [7][8] - The current stock price corresponds to a price-to-earnings ratio (P/E) of 13, 9, and 8 for the years 2025, 2026, and 2027 respectively [7]