Investment Rating - The investment rating for the company is "Buy-A" with a target price of 29.81 CNY, while the current stock price is 24.68 CNY [6]. Core Views - The company reported a steady revenue growth in H1 2025, achieving 5.991 billion CNY, a year-on-year increase of 30.14%. However, the net profit attributable to shareholders decreased by 13.80% to 474 million CNY [2][12]. - The company's diverse product offerings, including food and medical packaging materials, daily consumer products, and electrical and industrial paper products, have driven revenue growth. The domestic and international markets both showed positive growth [3][12]. - The company is actively expanding its production capacity with new projects, including a significant investment of 11 billion CNY in a bamboo pulp and paper integration project in Sichuan [4][12]. Summary by Sections Financial Performance - In H1 2025, the company achieved a revenue of 5.991 billion CNY, with a 30.14% year-on-year growth. The net profit was 474 million CNY, down 13.80% year-on-year [2][12]. - The gross margin for H1 2025 was 13.71%, a decrease of 3.98 percentage points year-on-year, while the net margin was 7.97%, down 4.07 percentage points year-on-year [11][12]. Product and Market Analysis - The food and medical packaging materials segment saw a production volume of 169,900 tons in H1 2025, with sales volume reaching 147,300 tons, a year-on-year increase of 35.72% [3]. - The electrical and industrial paper products segment reported a sales volume of 3,600 tons, with a revenue growth of 14.63% [3]. - Domestic sales reached 5.315 billion CNY, growing by 31.59%, while international sales were 423 million CNY, up 15.40% [3]. Capacity Expansion and Future Outlook - The company has successfully launched its self-produced pulp projects in Guangxi and Hubei, with a total output of 103,000 tons of self-produced pulp and 72,800 tons of specialty paper by H1 2025 [4]. - The company plans to invest 11 billion CNY in a new bamboo pulp and paper integration project in Sichuan, aiming for an annual production capacity of 800,000 tons of bamboo pulp and 1.2 million tons of new paper materials [4][12]. - Revenue projections for 2025-2027 are 12.752 billion CNY, 15.446 billion CNY, and 18.167 billion CNY, with corresponding net profits of 1.096 billion CNY, 1.413 billion CNY, and 1.692 billion CNY [12][13].

Core Viewpoint - Xianhe Co., Ltd. has shown solid revenue growth in H1 2025, with a 30.1% year-on-year increase in revenue, although net profit has declined by 13.8% due to various factors including price drops in certain paper products and ongoing losses in the Hubei base [2][3]. Financial Performance - In H1 2025, the company achieved revenue of 5.991 billion yuan, with a net profit of 474 million yuan and a non-recurring net profit of 443 million yuan [2]. - Q2 2025 revenue reached 3 billion yuan, reflecting a 25.3% year-on-year increase, while net profit decreased by 15.4% to 238 million yuan [2]. - The gross margin for Q2 2025 was 12.8%, down 4.6 percentage points year-on-year, and the net profit margin was 7.9%, down 3.8 percentage points year-on-year [4]. Production and Cost Management - The company has increased its self-produced pulp ratio, which has positively impacted cost management, despite a decrease in paper prices [2][3]. - The Hubei base reported a loss of 74 million yuan in H1 2025, while the Guangxi base contributed a profit of 117 million yuan [2][3]. Product Segmentation and Growth Potential - Revenue growth by product category in H1 2025 included: daily consumer products (+11.2%), food and medical (+22.9%), business communication (+2.9%), tobacco (+13.8%), and electrical and industrial (+3.5%) [3]. - The company is investing in new product categories and has established partnerships in the new tobacco sector, aiming to expand its product matrix [3]. Future Outlook - The company expects a production capacity increase of over 900,000 tons for both paper and pulp by the end of 2025, with a projected year-on-year production growth of 30%-40% [3]. - The company maintains a "buy" rating with projected net profits of 1.11 billion yuan, 1.62 billion yuan, and 1.93 billion yuan for 2025, 2026, and 2027 respectively [4].