Investment Rating - The report maintains a "Buy" rating for Jinhe Biological (002688) with a target price not specified [1]. Core Views - The company reported a revenue of 2.036 billion yuan for the first three quarters of 2025, a year-on-year increase of 22.86%, and a net profit attributable to shareholders of 139 million yuan, up 22.25% year-on-year [2]. - In Q3 2025, the company achieved a revenue of 646 million yuan, a 9.20% increase year-on-year, but the net profit dropped to 1.15 million yuan, a decline of 94.94% year-on-year [2][3]. - The decline in Q3 profit is attributed to increased marketing efforts, higher employee compensation, and increased R&D expenses [3]. - The main product, Jinmeisu, has seen a cost reduction, and both domestic and international sales are performing well [4]. - The company is actively expanding its pet business, focusing on pharmaceuticals and vaccines, with a dual-brand strategy for domestic and international markets [5]. Summary by Sections Financial Performance - For the first three quarters of 2025, the company achieved a revenue of 2.036 billion yuan, a 22.86% increase year-on-year, and a net profit of 139 million yuan, up 22.25% year-on-year [2]. - In Q3 2025, revenue was 646 million yuan, a 9.20% increase year-on-year, while net profit fell to 1.15 million yuan, a 94.94% decline year-on-year [2][3]. Market and Product Analysis - The sales of the main product, Jinmeisu, have increased significantly, with growth in both domestic and international markets [4]. - The company has adjusted the cost of Jinmeisu downwards, benefiting from lower raw material prices and increased production capacity [4]. - The pet business is a key strategic focus, with plans to develop a range of pharmaceutical and vaccine products [5]. Future Outlook - The company forecasts revenue for 2025-2027 to be 2.835 billion, 3.030 billion, and 3.274 billion yuan respectively, with net profits projected at 197 million, 326 million, and 423 million yuan [7]. - The report highlights the potential for growth in the pet market, which is expected to exceed 300 billion yuan in 2024 [5].

Core Viewpoint - Jinhe Biology demonstrated strong financial performance in the first half of 2025, with significant revenue and profit growth, particularly in the veterinary chemical drug sector [2][11]. Financial Overview - Total revenue reached 1.39 billion yuan, a year-on-year increase of 30.45% [2]. - Net profit attributable to shareholders was 138 million yuan, up 51.52% year-on-year [2]. - The second quarter saw total revenue of 765 million yuan, a 40.05% increase, and net profit of 86.8 million yuan, growing by 89.2% [2]. Profitability - The company's gross margin improved to 34.55%, an increase of 3.76% year-on-year [3]. - Net profit margin rose to 9.92%, up 16.73% year-on-year, indicating effective cost control and enhanced product value [3]. Costs and Expenses - Total operating expenses amounted to 279 million yuan, accounting for 20.03% of revenue, an increase of 2.32% year-on-year [4]. - Management expenses grew by 36.2%, primarily due to salary increases, depreciation from completed projects, and increased stock incentive costs [4]. - Financial expenses rose by 46.74%, attributed to interest expenses from completed projects and reduced foreign exchange gains in the previous year [4]. Cash Flow and Debt Situation - Cash and cash equivalents decreased to 625 million yuan, down 5.21% year-on-year [5]. - Operating cash flow per share was 0.17 yuan, a decline of 20.08% [5]. - Net cash flow from financing activities dropped by 95.88%, and net increase in cash and cash equivalents fell by 89.9% [5]. - Interest-bearing liabilities increased to 2.528 billion yuan, up 0.72% year-on-year, with an interest-bearing asset-liability ratio of 41.41% [5]. Accounts Receivable - Accounts receivable stood at 590 million yuan, a year-on-year increase of 22.22%, with a ratio to profit of 589.11%, indicating a need to monitor collection [6]. Main Business Analysis - The veterinary chemical drug segment generated 860 million yuan, accounting for 61.83% of total revenue, with a gross margin of 38.13% [7]. - Revenue from starch and related products was 275 million yuan, making up 19.76% of total revenue, with a gross margin of 11.15% [7]. - Veterinary vaccine revenue reached 155 million yuan, representing 11.12% of total revenue, with a gross margin of 54.87% [7]. - Environmental services contributed 69.13 million yuan, accounting for 4.97% of total revenue, with a gross margin of 44.25% [7]. Regional Distribution - Domestic sales revenue was 802 million yuan, accounting for 57.67% of total revenue, with a gross margin of 26.59% [8]. - International sales revenue reached 588 million yuan, making up 42.33% of total revenue, with a gross margin of 45.40% [8]. Development Strategy - The company focuses on its core animal health business, with a dual-driven model of veterinary pharmaceuticals and vaccines, supported by environmental and agricultural processing sectors [9]. - The completion of the sixth phase project added 60,000 tons of production capacity for key products, enhancing competitiveness through cost reduction and improved fermentation indices [9]. - The veterinary vaccine business has rapidly established a comprehensive industry layout through self-built and acquired production bases and R&D centers [9].

Financial Performance - The company achieved a revenue of 1.39 billion CNY in the first half of the year, representing a year-on-year growth of 30.45% [1] - The net profit attributable to shareholders reached 138 million CNY, with a year-on-year increase of 51.52% [1] - The adjusted net profit was 128 million CNY, reflecting a growth of 50.88% compared to the previous year [1] Segment Performance - The pharmaceutical segment saw significant growth, generating 860 million CNY in revenue, a 72.15% increase, accounting for 61.83% of total revenue [1] - The veterinary pharmaceutical segment reported improved sales and profit levels, with major products like the antibiotic premix showing substantial growth [2] Market Dynamics - The price of raw materials, such as corn, decreased by 11.90% compared to the previous year, contributing to lower production costs [2] - The U.S. pharmaceutical market has shown consistent growth, with increased sales of key products like the water-soluble antibiotic [2] - The domestic market for the antibiotic is expected to grow due to improved profitability in the pig farming sector and expanded sales channels [2] Product Development - The company has received approval for the antibiotic in targeted animals, particularly sheep, which is expected to contribute significantly to sales growth [3] - New products, including vaccines for various diseases, are anticipated to launch within the year, enhancing the product portfolio [2][3] Strategic Initiatives - The company is focusing on expanding its pet business, with 15 products currently available and more in the pipeline [2] - A new pet app, "Ai Pet Easy," is set to launch, incorporating AI features for enhanced user engagement and potential revenue generation [2][3] Challenges and Outlook - The solid waste landfill business experienced a temporary decline in revenue, but recovery is expected in the future [4] - The overall outlook for the pharmaceutical segment remains positive, with expectations of maintaining a relatively high gross margin [3]

Core Viewpoint - The company, Jinhe Biology, reported a strong performance in the first quarter of 2025, with significant growth in revenue and net profit, driven primarily by its veterinary chemical products, particularly the sales of its key product, Jinmeisu [4][12]. Revenue and Profit Growth - In Q1 2025, the company achieved an operating income of 625.15 million yuan, representing a year-on-year increase of 20.35% [4][12]. - The net profit attributable to shareholders was 51.12 million yuan, up 13.23% year-on-year [4][12]. - The gross profit margin stood at 35.78% [12]. Product Performance - Revenue from veterinary chemical products increased by 21.47% year-on-year, with Jinmeisu being a major contributor, especially in the U.S. market, which reached a historical high [2]. - The company plans to enhance its product offerings with the full production of a new factory in 2025, which will produce Jinmeisu, Tetracycline, and Strongly Mycin, thereby extending its product line [2]. Research and Development - R&D expenses grew by 27.03% in 2024, indicating a strong commitment to innovation [3]. - The company is focusing on expanding the application of Jinmeisu and has received approval for its use in additional target animals, including sheep [3]. Market Outlook - The global animal health industry is expected to continue growing, with the domestic market showing significant potential, as evidenced by a compound annual growth rate of 8.43% in the domestic veterinary drug market from 2019 to 2023 [5][11]. - The company is optimistic about the future, particularly in the veterinary biological products market and the pet market, which is also expanding [6][11]. Strategic Initiatives - The company is enhancing its collaboration with Shanghai Jiao Tong University to leverage synthetic biology for product development and innovation [8]. - Plans are in place to expand the pet health business, with a focus on both chemical and vaccine products [8]. Competitive Position - The company has established a strong presence in the overseas market, with 60-70% of its chemical products sold internationally, particularly in the U.S. [10]. - The company aims to strengthen its market position by enhancing customer satisfaction and expanding its product offerings in international markets [10].

Financial Performance - In 2024, the company achieved a revenue of CNY 2.371 billion, a year-on-year increase of 9.04%, and a net profit of CNY 100 million, up 15.9% [1] - In Q1 2025, revenue reached CNY 625 million, a growth of 20.35%, with a net profit of CNY 51.12 million, increasing by 13.23% [2] - The net cash flow from operating activities for 2024 was CNY 498 million, a significant increase of 150.76% [2] Product Performance - The veterinary pharmaceutical segment saw a 21% increase in sales volume and a 21.47% rise in revenue in 2024; Q1 2025 sales volume surged by 55.55% [2] - The expected annual sales volume for 2025 is approximately 100,000 tons of gold mildew powder, reflecting a growth of around 65% [2] - The gross margin for gold mildew premix in 2024 improved by about 10 percentage points due to a 16.31% decrease in corn prices [2] Market Expansion - The U.S. market is the largest overseas market, accounting for about two-thirds of exports; the company plans to raise prices in the U.S. market starting May 1, 2025, to cover increased tariffs [3] - The company is expanding its product applications, with new approvals for gold mildew premix for sheep and ongoing applications for cattle and rabbit [2] Strategic Developments - A strategic cooperation agreement was signed with Shanghai Jiao Tong University for synthetic biology applications, aiming to develop new products and improve existing processes [2] - The company has established a pet division in Shanghai, with 8 health products and 1 rabies vaccine currently available, and 11 products under application [3][5] Investor Engagement - The company engaged with various investors and analysts during an online conference, discussing financial performance, market strategies, and product developments [1] - Key questions from investors included the pricing strategy for gold mildew products and the company's market share in the U.S. [3][4]