Investment Rating - The report maintains an "Outperform" rating for the company [2] Core Views - The company has shown signs of a performance turnaround in Q2 2025, with a revenue of 1.183 billion yuan, a year-on-year decline of 18.44%, but a net profit of 119 million yuan, reflecting a year-on-year increase of 20.89% [7] - The company is focusing on building a business moat through technological strength, with a strategic shift towards high-quality product offerings and optimized cost structures [7] - The company is expected to achieve a net profit of 451 million yuan in 2025, with a corresponding PE ratio of 62 [7] Financial Data and Profit Forecast - Total revenue for 2025 is projected at 5.68 billion yuan, with a year-on-year growth rate of 5.7% [6] - The net profit for 2025 is estimated at 451 million yuan, showing a significant year-on-year increase of 159.1% [6] - The gross margin is expected to be 74.8% in 2025, with a gradual increase in ROE from 6.3% in 2025 to 7.5% in 2027 [6][9] Business Segments - The skincare innovation segment reported a revenue of 912 million yuan in H1 2024, a decline of 33.97%, as the company halted price promotion strategies [7] - The raw materials business generated 626 million yuan, a slight decline of 0.58%, while the medical terminal business reported 673 million yuan, down 9.44% [7] - The nutrition science innovation segment saw a revenue increase of 32.40% to 38 million yuan, driven by effective food components [7]

Core Insights - Huaxi Biological Technology Co., Ltd. reported a revenue of 2.261 billion yuan and a net profit of 221 million yuan for the first half of 2025, facing short-term pressure due to industry conditions but focusing on reform measures for long-term development [2] - The company increased its R&D investment to 231 million yuan, a year-on-year growth of 15.25%, with R&D expenses accounting for 10.22% of revenue, up 3.09 percentage points from the previous year [2] R&D and Product Development - The company successfully launched six new bioactive raw materials, including injection-grade cross-linked sodium hyaluronate and recombinant type III humanized collagen, leveraging eight R&D platforms [2][3] - The injection-grade BloomColla® recombinant type III humanized collagen has 100% homology with human collagen sequences, leading the industry in safety and stability [2] - The food-grade MitoEGT ergothioneine, with 99.9% purity, has been included in the national standard material library, ranking high in compliance usage [2] Technological Advancements - The company made significant progress in the independent R&D and production of high-specification sterile HA raw materials, achieving breakthroughs in technology and industrial production [3] - The injection-grade non-animal source chondroitin sodium completed process validation and initiated medical device documentation registration, supporting high-end medical and innovative drug fields [3] - As of June, the company holds a total of 632 patents, reinforcing its technological barriers and focusing on basic research and application of functional sugars and amino acids [3] Business Performance - The raw material business generated 626 million yuan in revenue, maintaining stability, with a gross margin of 85.09% for pharmaceutical-grade sodium hyaluronate and over 90% for some medical aesthetics and orthopedic raw materials [3] - The medical terminal business achieved revenue of 673 million yuan, with a 20% year-on-year increase in sales of Class III medical devices [3] International Market Expansion - International sales of raw materials reached 331 million yuan, accounting for 52.93% of the company's raw material business revenue [3] - The company experienced nearly 10% continuous growth in sales in Europe, Southeast Asia, and South Korea, and over 20% growth in Japan, benefiting from localized operations in its international strategy [3]