Investment Rating - The investment rating for the company is "Buy" (maintained) [1] Core Views - The company reported a narrowing decline in revenue, with improved profitability driven by cost control measures [5][7] - The second quarter showed a significant recovery in net profit, with a year-on-year increase of 71% [4][5] - The company is focusing on optimizing its resource allocation and enhancing its operational efficiency [5][6] Financial Performance Summary - For the first half of 2025, total revenue was 3.532 billion yuan, a decrease of 23% year-on-year, while net profit attributable to shareholders was 737 million yuan, down 17% [4] - In Q2 2025, total revenue was 1.741 billion yuan, a decrease of 12% year-on-year, but net profit increased by 71% [4] - The gross margin for H1 2025 was 68.55%, with a slight decrease of 0.01 percentage points, while Q2 2025 saw an increase of 2 percentage points to 68.43% [5] - The company reduced its sales expense ratio by 5 percentage points in H1 and 11 percentage points in Q2, indicating effective cost control [5] Revenue and Profit Forecast - The company expects a further narrowing of revenue decline and an increase in profit margins for the full year 2025 [7] - The adjusted earnings per share (EPS) forecasts for 2025-2027 are 0.46, 0.52, and 0.60 yuan respectively, with corresponding price-to-earnings (PE) ratios of 27, 24, and 21 times [7][10]

Group 1: Financial Performance - The company's revenue decline in Q2 narrowed, and net profit increased year-on-year due to effective strategies in product and operations [1] - The gross margin remained stable compared to the same period last year, with a slight increase in Q2 due to changes in product and platform structure [1] - Online sales improved quarter-on-quarter in Q2, reflecting a stable pricing environment [5] Group 2: Market Trends and Competition - Market concentration is decreasing, with ongoing challenges from a sluggish offline market and intense online competition, particularly from interest e-commerce [2] - The company plans to enhance marketing resource allocation to expand offline product distribution in the second half of the year [2] Group 3: Brand and Product Development - The main brand and LSG are the primary contributors to revenue, with both showing good performance in product innovation and market expansion [3] - LSG's cross-border e-commerce accounts for approximately 70% of its sales, indicating its significance as a growth channel [4] - The company launched its first OTC product, "Jianliduo Sulfate Amino Glucosamine Capsules," in July, with plans for more products based on consumer demand [6] Group 4: Strategic Initiatives - The company aims to explore and optimize the business model for the Yep brand, focusing on attracting younger consumers online [7] - The company is adjusting its procurement strategies to mitigate the impact of raw material price fluctuations [9] - The decision to change the fundraising investment to a liquid bar production line is driven by the rapid growth of liquid beverage products [9]