Investment Rating - The report maintains a "Buy" rating for the company [2][6]. Core Views - In the short term, the company's performance is expected to be resilient due to the release of overseas production capacity and the growth of new customers in the automotive leather segment. In the long term, the expansion into the sports industry supply chain, having entered global brands like Adidas and VF, is anticipated to unlock growth and valuation potential. New businesses such as Hongxing and Baotai are positioned for high growth due to industry prosperity, contributing to the company's expected growth [2][5]. Financial Performance Summary - For the first half of 2025, the company achieved revenue of 1.34 billion yuan, a year-on-year increase of 6%, but the net profit attributable to the parent company decreased by 45% to 31 million yuan. In Q2 alone, revenue was 710 million yuan, with a similar year-on-year growth of 7%, while net profit dropped by 45% to 12 million yuan [4][5]. - By business segment, the main domestic sales were a drag on revenue, while automotive leather continued to show impressive growth. The shoe and bag segment saw a slight revenue decline of 0.1% to 850 million yuan, primarily due to weak domestic orders. In contrast, the automotive leather segment reported a 30% increase in revenue to 380 million yuan, driven by strong sales from core customers [5]. Profitability Insights - The overall gross margin in Q2 slightly decreased by 0.2 percentage points to 20.3%. The increase in management expenses and inventory impairment losses negatively impacted profits, with the net profit margin dropping by 1.7 percentage points to 1.7% [5]. Future Profit Forecast - The company forecasts net profits attributable to the parent company for 2025 to 2027 at 120 million, 160 million, and 190 million yuan, respectively, with year-on-year changes of -14%, +34%, and +19%. The corresponding price-to-earnings ratios are projected to be 32, 24, and 20 times [2][5].

Investment Rating - The report maintains a "Buy" rating for the company [2][7]. Core Views - Short-term performance is expected to improve due to the release of overseas production capacity and new customer growth in the automotive leather segment, indicating potential earnings elasticity. Long-term, the company is expanding its export business into the sports industry, having entered the supply chains of global sports brands like Adidas and VF, which could enhance growth and valuation prospects. New businesses, such as Hongxing and Baotai, are positioned for high growth due to industry demand, contributing to the company's overall growth outlook. The projected net profit for the company from 2025 to 2027 is estimated at 170 million, 190 million, and 210 million yuan, representing year-on-year growth of 20%, 13%, and 11%, with corresponding P/E ratios of 16, 14, and 13 times [2][4][6]. Financial Performance Summary - In 2024, the company achieved revenue of 2.951 billion yuan, with a net profit attributable to the parent company of 142 million yuan, reflecting a year-on-year revenue increase of 9% but a decline in net profit by 24%. In Q4 2024, the company reported revenue of 937 million yuan and a net profit of 32 million yuan, showing significant growth compared to the previous year. For Q1 2025, revenue was 627 million yuan, with a net profit of 19 million yuan, indicating a year-on-year revenue increase of 5% but a decline in net profit by 45% [4][5][6]. Business Segment Analysis - The main business segment, focused on footwear and bags, is expected to see a slight decline in revenue due to a weak domestic consumption environment affecting the internal sales portion. Conversely, the automotive leather segment is projected to grow by 20% to 720 million yuan, driven by strong sales from core customers. The second-layer leather business is also expected to see significant revenue growth due to a resurgence in demand for retro styles, although profit margins may be impacted by raw material price fluctuations [5][6]. Profitability Insights - The overall gross margin for 2024 remained stable at 21.4%, with a slight increase of 0.02 percentage points year-on-year. However, asset impairment losses significantly impacted net profit, leading to a decline in net profit margin to 4.8%. In Q1 2025, the gross margin improved to 20.7%, but net profit margin decreased to 3.0% due to increased financial expenses and asset impairment losses [6][4].