Financial Data and Key Metrics Changes - Total revenue declined by 18% year on year due to strategic restructuring and increased point redemption by customers [5][6][21] - The elevated effective tax rate was primarily due to non-deductibility of some executive compensation and temporary timing differences in aircraft sales recognition [6][7] Business Line Data and Key Metrics Changes - The average customer spending is trending lower than last year, but there are early signs of recovery in certain areas such as the gorilla clinic [5][6] - The Jun clinic and Neo Skin clinic are achieving an average spend per customer that exceeds existing clinics, indicating strong growth potential [12][13] Market Data and Key Metrics Changes - The aesthetics medicine industry in Japan is experiencing severe competition, yet customer visits have increased to 6,310,000 annually, with a high repeat rate of 72% [4][5] - The dermatological aesthetics segment is showing a higher growth rate, presenting significant growth potential [10] Company Strategy and Development Direction - The company is implementing a multi-brand strategy tailored to different market segments to meet diverse customer needs [10][14] - The focus is on enhancing the medical tourism business, particularly targeting Chinese tourists [15] - The company aims to expand its clinic network from 260 to 1,000 clinics over the next ten years [32] Management's Comments on Operating Environment and Future Outlook - Management acknowledges that while there were negative factors impacting performance, they believe the business will improve moving forward [35][41] - The company is entering a phase of growth investment after completing business restructuring [44] Other Important Information - The company conducted its first-ever share buyback from May to July, which positively impacted share price and liquidity [22][44] - The company is considering new share issuance and partial sale by the founder to improve accessibility for a broader investor base [22][46] Q&A Session Summary Question: Are the new clinics starting up as planned? - Newly opened clinics are seeing steady customer visits, with an increase in male customers noted [24][25] Question: What is the future pricing trend? - The company is adopting a multi-brand strategy with different pricing tiers to meet varying customer needs [26] Question: Can you explain the growth strategy regarding organic and inorganic growth? - The company plans to proactively open new clinics and conduct M&A, with a strong track record of turning around acquired clinics [27][29] Question: How many clinics are you planning to open in Japan? - The company aims to increase the number of clinics to 1,000 over the next ten years [32] Question: What is the outlook for future profitability? - The company expects to secure sufficient margins and improve overall profitability as new clinics are established [34] Question: How is the company addressing the current share price trend? - The company is focusing on improving liquidity through share buybacks and considering dividend payments [43][44] Question: What are the plans for the CEO's shareholding? - The CEO is considering selling shares to improve liquidity and fund investments [46]

Core Viewpoint - The report highlights a positive performance in the pharmaceutical sector, particularly in the innovative drug industry, driven by ongoing licensing agreements and supportive domestic policies [3]. Fund Performance - The fund reported a profit of 26.97 million yuan in Q2 2025, with a weighted average profit per fund share of 0.0627 yuan [2]. - The fund's net asset value (NAV) growth rate for Q2 was 7.62%, and the fund size reached 375 million yuan by the end of Q2 [2][16]. - As of July 18, the fund's unit NAV was 0.96 yuan [2]. - The fund's performance over the past three months showed a NAV growth rate of 14.74%, ranking 112 out of 138 comparable funds [4]. - Over the past six months, the fund's NAV growth rate was 25.40%, ranking 100 out of 138 [4]. - The one-year NAV growth rate was 24.99%, also ranking 100 out of 133 [4]. - The three-year NAV growth rate was 4.99%, ranking 46 out of 107 [4]. Investment Strategy - The fund manager expressed optimism about the innovative drug sector, indicating a shift from a general revaluation phase to a stage where actual performance and partnerships will be tested [3]. - The strategy includes a "barbell" approach, focusing on high-probability or high-return innovative drug companies [3]. - The fund is also looking at sectors with strong performance, such as orthopedics and upstream innovative drugs, while making early allocations in improving sectors like medical devices [3]. - New technologies like AI and brain-computer interfaces are expected to transform the healthcare system, although short-term financial impacts on related companies may be limited [3]. Risk and Return Metrics - The fund's three-year Sharpe ratio was 0.1406, ranking 41 out of 105 comparable funds [9]. - The maximum drawdown over the past three years was 29.8%, ranking 97 out of 106 [11]. - The fund's average stock position over the past three years was 85.43%, slightly below the comparable average of 86.95% [14].

Core Insights - The pharmaceutical sector is expected to recover from 2025 onwards, following a four-year adjustment period, with a cumulative increase of 4.57% in the pharmaceutical and biological industry as of May 30, 2025 [1][2] - The report suggests focusing on innovative drug companies with solid R&D foundations and competitive products for international markets, as well as traditional pharmaceutical companies with reasonable valuations [1] - AI is anticipated to empower the entire pharmaceutical supply chain, enhancing efficiency in drug development, production, and medical services [2] Group 1: Market Recovery - The pharmaceutical sector has experienced a recovery since 2025, ranking 6th among 31 primary industries in terms of performance, with a cumulative increase of 4.57% [1] - The holding of pharmaceutical stocks has increased but remains at historically low levels [1] - Multiple sub-sectors within the pharmaceutical industry are showing signs of stabilization and upward trends [1] Group 2: Growth Opportunities - Incremental opportunities are expected from innovative drugs and AI, while structural opportunities may arise from the recovery of left-side assets and valuation adjustments [2] - 2025 is projected to be a significant year for domestic innovative drugs entering international markets, with many companies transitioning from generic to innovative drugs since the "4+7" procurement policy in 2018 [2] - Some pioneering innovative drug companies are anticipated to reach breakeven and turn profitable [2] Group 3: Left-Side Assets - Left-side assets are entering a mild recovery phase, with traditional pharmaceutical companies, CXO, and consumer healthcare sectors gradually clearing existing risks [2] - The industry is expected to see a fundamental recovery as the risks associated with previous procurement policies and demand issues diminish [2]

Core Viewpoint - The company, Haohai Biological Technology (昊海生科), is facing significant challenges due to insider trading investigations involving its major shareholder, Jiang Wei, and a sharp decline in revenue growth and profitability in its core business segments, particularly in the medical aesthetics sector [1][2]. Financial Performance - In 2024, Haohai's revenue growth plummeted to 1.64%, with net profit only slightly increasing by 1.04%. In Q1 2025, both revenue and net profit further declined, with revenue decreasing by 4.25% and net profit dropping by 7.41% [1]. - The company announced a cash dividend of 231 million yuan in 2024, which accounted for 54.92% of its net profit, raising concerns about its financial sustainability amid declining performance [1][8]. Business Segments - The medical aesthetics segment, particularly the hyaluronic acid business, saw revenue of 742 million yuan in 2024, a significant slowdown from a 95.54% growth in 2023 to just 23.23% [5][6]. - The ophthalmology segment, as the second-largest supplier of artificial lenses in China, experienced a revenue decline of 7.60% in 2024, with specific product lines like artificial lenses and ophthalmic viscoelastic devices seeing drops of 14.06% and 19.53%, respectively [7][8]. Market Challenges - The hyaluronic acid market is facing intense competition, with over 400 brands and more than 50 approved Class III medical devices, leading to market saturation [5][6]. - The rise of alternative materials, such as collagen-based products, is impacting the demand for hyaluronic acid, with the retail market for collagen products projected to reach 173.8 billion yuan by 2027 [6]. - Regulatory changes have also affected the radiofrequency and laser equipment business, with new classifications requiring re-approval, leading to a 6.97% revenue decline in this segment [6]. Governance and Control - Jiang Wei and his wife, You Jie, control approximately 45.82% of the company’s shares, allowing them significant influence over corporate decisions despite Jiang not holding an official position [5][1]. - Concerns about corporate governance have been heightened due to the ongoing investigation into Jiang Wei, which may reflect deeper issues within the company's management practices [1][2].