Investment Rating - The investment rating for the company is "Buy" (maintained) [7] Core Insights - The company's revenue for Q1 2025 reached 910 million yuan, representing a year-on-year increase of 42.4%, with a net profit attributable to shareholders of 91 million yuan, up 5.7% year-on-year. The growth is driven by the consolidation of the "Jieting" brand and a recovery in the core diaper business [1][2] - The acquisition of Hubei Sibao Care, completed on January 20, 2025, significantly contributed to revenue growth, with the "Jieting" brand showing strong performance on e-commerce platforms [2] - The gross margin improved significantly to 34.67%, up 6.96 percentage points year-on-year, primarily due to the higher gross margin from the Sibao brand compared to the company's traditional OEM business [3] - The company is expanding its production capacity despite market challenges, enhancing its market share and positioning for long-term growth through its own brands [4] - The company is expected to maintain a high dividend payout ratio of approximately 67% in 2024, with projected revenues of 3.744 billion yuan in 2025, reflecting a year-on-year growth of 27.83% [5] Summary by Sections Financial Performance - In Q1 2025, the company achieved a gross margin of 34.67%, a year-on-year increase of 6.96 percentage points, while the net profit margin decreased to 9.95%, down 3.96 percentage points year-on-year due to increased sales expenses and a decline in interest income [3] - Revenue projections for 2025-2027 are 3.744 billion, 4.203 billion, and 4.664 billion yuan, with corresponding year-on-year growth rates of 27.83%, 12.26%, and 10.95% [5][12] Market Position and Growth Potential - The company is expanding its production capacity through acquisitions and is expected to see significant growth in its own brands, particularly in the Thai market [4] - The "Jieting" brand's performance on e-commerce platforms indicates strong market demand, contributing to the overall revenue growth [2]

Investment Rating - The report maintains a "Buy" rating for the company, indicating an expected relative return of over 20% within the next six months [5][16]. Core Views - The company is expanding its production capacity through the acquisition of assets, which is expected to enhance its competitive position in the baby diaper manufacturing sector. The investment of up to 400 million RMB in establishing a new subsidiary and acquiring production assets is aimed at optimizing existing operations and creating new profit growth points [1][2]. - The implementation of pro-natalist policies in China is anticipated to boost demand for baby products, particularly high-value items like pull-up diapers. The expected increase in newborns in 2024 is projected to lead to a gradual recovery in downstream demand [3][4]. Summary by Sections Company Overview - The company plans to invest no more than 400 million RMB to establish a wholly-owned subsidiary in Nantong, Jiangsu Province, and to acquire land use rights and production equipment from Nantong Dawang [1]. - The acquisition includes 84,000 square meters of land and 68,000 square meters of factory space, along with 11 production lines for baby diapers [1]. Market Position - The company has a strong brand presence in China, particularly with its GOO.N brand of baby diapers. The acquisition of Nantong Dawang's production line is expected to further expand its production capacity and market share [2]. Financial Projections - The company forecasts net profits of 440 million RMB, 520 million RMB, and 610 million RMB for the years 2024, 2025, and 2026, respectively, with corresponding P/E ratios of 14, 12, and 10 [4]. - Revenue is projected to grow from 2.8 billion RMB in 2024 to 3.6 billion RMB in 2026, reflecting a compound annual growth rate of approximately 14.84% [4][10]. Industry Context - The Chinese government is actively promoting pro-natalist policies, including childcare subsidies, which are expected to stimulate demand for baby products. This policy shift is likely to benefit the company significantly [3][4].