Investment Rating - The investment rating for the company is maintained at "Buy" [1] Core Views - The company reported a steady revenue growth of 9.99% year-on-year for H1 2025, with revenue reaching 1.278 billion RMB, while net profit decreased by 10.17% to 130 million RMB [1][2] - In Q2 2025, the company achieved revenue of 709 million RMB, reflecting a year-on-year increase of 15.53%, but net profit also saw a decline of 8.67% [1][2] - The company is focusing on expanding its domestic and international markets, which has led to a significant increase in order volume, although this has put pressure on short-term profitability due to high R&D investments [1][4] - The demand from high-end manufacturing sectors such as wind power, aerospace, and new energy vehicles is expected to continue driving the company's performance growth [1] Revenue and Profit Analysis - For H1 2025, the revenue breakdown by product shows that large machining centers, vertical CNC machines, horizontal CNC machines, and other machine tools accounted for 41.31%, 33.38%, 22.68%, and 2.14% of total revenue, respectively [2] - The revenue from large machining centers decreased by 0.49% year-on-year, while vertical and horizontal CNC machines saw increases of 16.73% and 14.40%, respectively, becoming the main drivers of revenue growth [2] Profitability Metrics - The company's gross margin for H1 2025 was 20.26%, down by 5.05 percentage points year-on-year, and the net margin was 10.17%, down by 2.28 percentage points [3] - The increase in fixed costs due to the commissioning of the fourth phase of production and intensified market competition have compressed profit margins [3] R&D Investment - The company increased its R&D expenditure to 64.55 million RMB in H1 2025, a year-on-year increase of 12.55% [4] - Key breakthroughs in precision control, high-speed motion control, and intelligent manufacturing systems have been achieved, enhancing the precision and stability of machine tools [4] Market Strategy - The company is pursuing a dual-market strategy, focusing on both domestic and international markets, with products sold in over 60 countries and regions [4] - The establishment of a sales network combining direct sales and distribution is aimed at strengthening customer loyalty [4] Profit Forecast and Valuation - The forecasted net profits for 2025-2027 are 364 million RMB, 441 million RMB, and 500 million RMB, respectively, with corresponding EPS of 0.80, 0.96, and 1.09 RMB [5] - The target price for the company is set at 20.00 RMB, based on a PE valuation of 25 times for 2025 [5]