Investment Rating - The industry investment rating is "Hold" [1] Core Insights - The long-term care insurance (LTCI) system in Japan has diversified elderly care services, addressing the challenges posed by an aging population and declining birth rates. The LTCI was officially implemented in 2000, with a focus on providing comprehensive care for the elderly [3][24]. - The LTCI system in Japan is characterized by government leadership, diverse service providers, varied service offerings, and a well-integrated community care system. This has led to improved efficiency and sustainability in elderly care [4][25]. - The implementation of LTCI has spurred the growth of the elderly care service industry, increasing demand for professional caregivers and related products, significantly expanding the market size from 3.6 trillion yen in 2000 to 9.6 trillion yen by 2013 [34]. Summary by Sections Long-term Care Insurance Development - Japan's LTCI system was established to address the needs of an aging population, with mandatory participation for individuals aged 65 and older, and those aged 40-64 with specific health conditions [3][24]. - The system has evolved through three phases: initial establishment, service refinement, and diversification of care options [25]. Market Dynamics - The LTCI has led to a significant increase in private sector participation in elderly care services, enhancing service quality and efficiency through competition [5][30]. - In China, the LTCI pilot program began in 2016, expanding to 49 cities by 2024, with 180 million participants, indicating a growing demand for elderly care services [6][35]. Company Performance - Reliable Co., a leading company in medical care and disability care products, has shown steady growth, with domestic revenue accounting for 58.03% in 2024. The company is well-positioned to benefit from the increasing demand for high-quality elderly care supplies [8][38].

Core Viewpoint - The company is facing significant pressure on its performance due to fluctuations in raw material prices, which have severely squeezed profit margins despite a steady expansion in the market for consumer paper products in China [1][3]. Financial Performance - In 2024, the company reported total revenue of 8.151 billion yuan, a year-on-year decrease of 16.84%, and a net profit of 77.18 million yuan, down 76.8% year-on-year [3]. - This marks the fourth consecutive year of declining net profits for the company, with net profits decreasing by 35.85%, 39.77%, and 4.92% in the years 2021 to 2023 respectively [3]. - The impact of raw material price fluctuations has been a significant factor in the company's poor performance, with previous statements indicating that rising raw material costs and increasing market competition have created substantial operational pressures [3][4]. Strategic Initiatives - In response to the cost pressures from raw material price volatility, the company has been attempting diversification through the introduction of new product lines, such as the sanitary napkin brand "Duo Lei Mi" launched in 2019, which is seen as a future growth driver [4]. - The company has also expanded into adult incontinence products and home cleaning products, including laundry pods and liquids, and has ventured into skincare with the launch of a hand cream named "Yue Ji Rou" in September 2024 [4]. - Despite these diversification efforts, the main business of consumer paper products still accounts for over 90% of revenue, with other business lines contributing less than 10% [4]. Competitive Landscape - The company's declining performance is attributed not only to rising raw material costs but also to intensified competition within the consumer paper industry, with competitors like Hengan International and Vinda International impacting market share and sales performance [5].