Investment Rating - The investment rating for the company is "Buy" and is maintained [6]. Core Views - The company reported a revenue of 2.26 billion yuan for H1 2025, a year-on-year decline of 19.6%, with a net profit attributable to shareholders of 220 million yuan, down 35.4% year-on-year. In Q2 2025, revenue was 1.18 billion yuan, a decrease of 18.4% year-on-year, while net profit attributable to shareholders was 120 million yuan, showing a year-on-year increase of 20.9% [2][4]. Summary by Sections Financial Performance - For H1 2025, the revenue breakdown by business segments shows raw materials at 630 million yuan (down 0.6%), medical terminals at 670 million yuan (down 9.4%), skin science at 910 million yuan (down 34.0%), and nutrition science at 40 million yuan (up 32.4%). The overseas growth in raw materials was nearly 10% in Europe, Southeast Asia, and South Korea, with Japan exceeding 20% [9]. - The net profit margin for H1 2025 was 9.8%, a decline of 2.4 percentage points year-on-year, primarily due to a 3.5 percentage point drop in gross margin to 71%. The second quarter showed improvement with net profit margins of 9.5% in Q1 and 10.1% in Q2, indicating a recovery trend [9]. Investment Recommendations - The report suggests that the company is currently in a business adjustment phase, with Q2 profit margins showing initial positive results. The expectation is for the benefits of focusing on brand effectiveness to gradually manifest across various business segments. EPS forecasts for 2025-2027 are 0.99, 1.36, and 1.60 yuan per share, respectively [9].

Core Viewpoint - The company reported a significant decline in revenue and net profit for the first half of 2025, primarily due to a decrease in income from its skin science innovation transformation business [1] Financial Performance - Revenue for the first half of 2025 decreased by 19.57% to 2.261 billion yuan, while net profit attributable to shareholders fell by 35.38% to 221 million yuan [1] - In Q2 2025, the company achieved revenue of 1.183 billion yuan, a year-on-year decline of 18.44%, but net profit increased by 20.89% to 119 million yuan [1] - The company recorded a credit impairment loss and asset impairment loss of approximately 48.37 million yuan in Q2 2025 [1] Business Segments - The raw material business generated revenue of 626 million yuan, a slight decrease of 0.58%, accounting for 27.70% of total revenue [1] - The medical terminal business reported revenue of 673 million yuan, down 9.44%, representing 29.77% of total revenue [2] - The skin science innovation transformation business saw revenue drop by 33.97% to 912 million yuan, making up 40.36% of total revenue [3] Product and Brand Development - The overall gross margin for the raw material business (excluding First) was 66.34%, with medical-grade hyaluronic acid raw materials achieving a gross margin of 85.09% [2] - The First brand generated revenue of 56.58 million yuan, a growth of 61.28%, while the Huaxi brand remained stable at 569 million yuan [2] - The company is focusing on product structure optimization and has introduced new products like the "All-in-One Repair Essence" and CT50 series targeting anti-aging [4][5] Market Strategy - The company is shifting from a sales logic driven by traffic to a brand communication logic based on scientific validation [3] - The company aims to enhance brand trust through deep interactions with consumers on platforms like Xiaohongshu and WeChat, creating a marketing loop from content to sales conversion [3] - The company has optimized its organizational structure to improve operational efficiency and reduce costs [5]