Investment Rating - The investment rating for the company is "Buy" and is maintained [10]. Core Views - The company's profitability continues to improve, with shareholder returns remaining at a high level. The dividend yield for the fiscal year 2024 is expected to exceed 7%. Future valuation recovery is likely to focus on stabilizing revenue, with expectations for sequential improvement in revenue in the second half of the year as the negative impacts of price increases are gradually absorbed [2][8]. Summary by Sections Financial Performance - In the first half of 2025, the company achieved a revenue of 40.092 billion, a year-on-year decrease of 2.7%. The gross profit margin increased by 1.9 percentage points to 34.5%, primarily due to cost structure optimization and improved operational efficiency. The net profit attributable to shareholders was 2.271 billion, representing a year-on-year growth of 20.5%. After excluding a one-time gain of approximately 211 million from the sale of a subsidiary, the adjusted net profit attributable to shareholders was 2.112 billion, a year-on-year increase of 12.0% [4][5]. Business Segments - **Instant Noodles Segment**: Revenue was 13.465 billion, down 2.5% year-on-year. The gross profit margin slightly increased by 0.7 percentage points to 27.8%, leading to a segment net profit growth of 11.9% to 951 million [5]. - **Beverage Segment**: Revenue was 26.359 billion, down 2.6% year-on-year. The gross profit margin significantly improved by 2.5 percentage points to 37.7%, resulting in a segment net profit growth of 19.7% to 1.335 billion [5][6]. Strategic Focus - The beverage business is focusing on health and innovation while maintaining its core offerings. The company is expanding its no-sugar beverage line and introducing differentiated products like "electrolyte alkaline water" to compete in the market. The core product "Ice Red Tea" is being enhanced through new flavors and scenario-based marketing [6]. - The instant noodle business is adopting a dual strategy of premiumization and value for money. The company plans to promote innovative products and cater to mid-to-high-end consumers while also offering larger volume products to meet consumer demand for value [7]. Future Outlook - The ongoing improvement in profitability and high dividend yield provide a safety margin for investors. The company is expected to see a sequential improvement in revenue in the second half of the year as the negative impacts of price increases are absorbed. EPS is projected to be 0.77 and 0.89 for 2025 and 2026, respectively, with corresponding PE valuations of 13 and 11.5 times [8].

Core Insights - The instant noodle industry is facing challenges in 2025, with competition from food delivery services impacting market share, yet there are signs of resilience and adaptation within the industry [1][2] - Despite a decline in overall sales, companies like Kang Shifu are innovating and adapting to consumer demands for higher quality and diverse offerings, indicating a shift from a growth phase to a more mature market [2][4] Financial Performance - Kang Shifu reported a revenue of 13.465 billion yuan in the first half of the year, accounting for 33.6% of total revenue, with a net profit increase of 11.9% to 951 million yuan [1] - The gross profit margin for the instant noodle business improved by 0.7 percentage points to 27.8%, outperforming industry peers [1] Market Trends - The Chinese instant noodle market, while experiencing fluctuations, remains the largest globally, with a consumption volume of 438 million packages in 2024 [3] - The market is transitioning from a focus on quantity to quality, with consumers seeking better taste and health benefits [4][10] Product Innovation - Kang Shifu is actively expanding its product offerings, introducing over 10 new products and 40 SKUs in the first half of 2025, catering to various price points and consumer preferences [6][10] - The launch of the "Special Special" fresh noodle line, featuring zero-fried technology, highlights the company's commitment to quality and innovation [8][12] Consumer Engagement - The company is redefining the instant noodle experience by integrating products into various consumption scenarios, such as outdoor activities and late-night snacks, to increase frequency of use [6][10] - Kang Shifu's focus on digital transformation and supply chain optimization enhances its ability to meet consumer demands effectively [14][16] Long-term Strategy - The company's growth is attributed to a long-term strategy that emphasizes quality raw materials, advanced production techniques, and a robust supply chain [11][14] - Kang Shifu's commitment to corporate social responsibility and cultural heritage further strengthens its brand image and consumer trust [18][19] Industry Outlook - The current industry adjustment period presents opportunities for differentiation, with Kang Shifu positioned to attract previously lost consumers and expand its market reach [19] - The narrative of industry decline is seen as a superficial observation, with actual developments indicating a structural upgrade in consumer preferences and market dynamics [19]

Core Viewpoint - The article discusses how brands can achieve longevity and resilience in a rapidly changing market, emphasizing the importance of deep-rooted capabilities, cultural integration, and continuous innovation. Group 1: Brand Longevity - Brands that aim for long-term success must establish a true competitive moat and continuously work towards building it [2] - The essence of a brand's long-term vitality lies in its ability to transcend short-term goals and maintain a strong foundational capability [1][3] Group 2: Strategic Patience and Professionalism - The concept of long-termism is often misunderstood; it requires a strategic focus on long-term goals while tactically addressing immediate needs [4] - Professionalism is crucial, as demonstrated by brands like Kang Shifu, which applies advanced technology to enhance product quality [5] Group 3: Innovation and Market Adaptation - Brands must innovate to remain competitive, with Kang Shifu exemplifying this through its development of healthier products that meet consumer demands [6][10] - The convenience food sector is shifting towards high-end offerings, but Kang Shifu focuses on quality and value rather than merely competing on price [7][10] Group 4: Cultural Integration - Successful brands often have a rich cultural foundation that enhances their value proposition, as seen in the contributions of companies like LVMH and their support for cultural heritage [11] - Kang Shifu integrates traditional Chinese culinary elements into its product development, creating a strong connection with cultural identity [12][15] Group 5: Structural Advantages - A brand's competitive advantage should be seen as a structural benefit rather than a temporary barrier, requiring ongoing evolution and adaptation [14] - Kang Shifu's commitment to continuous improvement in technology, product quality, and cultural relevance has allowed it to thrive in a competitive landscape [16][17]