Investment Rating - The report maintains a "Recommended" rating for Yihai International (01579.HK) with a target price of HKD 18.68 [2][8]. Core Views - Yihai International's resilience in third-party business is highlighted, with growth driven by B-end and overseas markets. The company reported a revenue of CNY 2.927 billion (flat year-on-year) and a net profit of CNY 310 million (up 0.4% year-on-year) for the first half of 2025 [2][8]. Financial Performance Summary - **Revenue and Profitability**: The company achieved total revenue of CNY 2.927 billion, with a net profit margin of 10.6% (down 0.6 percentage points year-on-year). Operating profit was CNY 430 million (up 4.0% year-on-year) [2][8]. - **Earnings Per Share**: The earnings per share (EPS) for the period was CNY 0.319, reflecting a year-on-year increase of 0.4% [2][8]. - **Dividend**: The interim dividend declared was CNY 0.3107 per share, representing a payout ratio of approximately 89% [2][8]. Revenue Structure and Growth Drivers - **Revenue Composition**: The revenue structure has shifted, with third-party revenue reaching CNY 2.064 billion (70.5% of total revenue, up 6.5% year-on-year). B-end restaurant client revenue surged by 131.7% to CNY 155 million, driven by customized products and new client acquisition [8]. - **Sales Channels**: Distributor channel revenue was CNY 1.727 billion (up 2.1% year-on-year), benefiting from refined management and new product penetration. Revenue from related parties was CNY 864 million (29.5% of total revenue, down 12.7% year-on-year) due to reduced demand from partners like Haidilao [8]. Cost Management and Margins - **Gross Margin**: The gross margin for the first half of 2025 was 29.5% (down 0.5 percentage points year-on-year), primarily due to declining margins from related parties and an increase in low-margin B-end products [8]. - **Expense Control**: The company managed expenses effectively, with a logistics cost increase leading to a distributor expense ratio of 12.6% (up 0.6 percentage points year-on-year). Advertising and marketing expenses decreased by 35.4% year-on-year, partially offsetting cost pressures [8]. Future Outlook - **Growth Potential**: The report indicates that B-end customized services and overseas market expansion are expected to drive future growth. The company has a robust cash reserve of CNY 1.52 billion and a low debt ratio of 13.5%, indicating a solid financial structure [8]. - **Earnings Forecast**: The projected EPS for 2025, 2026, and 2027 is CNY 0.74, CNY 0.81, and CNY 0.86, respectively, with corresponding price-to-earnings ratios of 16.5, 15.1, and 14.1 [8].