Core Viewpoint - The company reported a decline in revenue and net profit for the first half of 2025, attributed to tariff impacts and increased operational costs, but showed improvement in gross margin through cost reduction and product optimization [1][2]. Financial Performance - In H1 2025, the company achieved revenue of 728 million yuan, a year-on-year decrease of 13.94%, and a net profit attributable to shareholders of 79 million yuan, down 19.23% year-on-year [1]. - The gross margin improved to 31.98%, an increase of 5.63 percentage points compared to the same period last year, indicating a trend towards high-quality development [1]. Product Performance - The gross margins for key product categories increased, with specific improvements in H1 2025: - Livestock skin chew: +5.28 percentage points - Plant-based chew: +3.12 percentage points - Nutritional meat snacks: +6.75 percentage points - Main food and wet food: +11.04 percentage points [1]. Cost Structure - The company's expense ratio rose to 17.60%, an increase of 5.31 percentage points year-on-year, partially offsetting the gross margin improvement [1]. - The increase in sales expenses was due to higher investments in proprietary brands, while management expenses rose due to operational costs from New Zealand production [2]. Market Strategy - The company is focusing on developing its proprietary brands in the domestic market, targeting the mid-to-high-end pet owner demographic with new product launches [3]. - The "Jueyan" brand introduced several new freeze-dried products for small dogs and a beef bone soup canned series, while the "Haoshijia" brand filled market gaps in the mid-price range with various new products [3]. Future Outlook - The company anticipates gradual improvement in management expense ratios as New Zealand production capacity is released [3]. - The forecast for net profit attributable to shareholders for 2025-2027 is 199 million, 234 million, and 286 million yuan, respectively, with EPS projected at 0.79, 0.92, and 1.13 yuan, and PE ratios at 23, 19, and 16 times [3].

Core Viewpoint - The company experienced a decline in revenue and net profit in the first half of 2025, but showed resilience in its domestic brand growth and improved profitability metrics [1][2][3] Financial Performance - In 1H2025, the company reported revenue of 728 million yuan, a decrease of 13.94% year-on-year, and a net profit of 79 million yuan, down 19.23% year-on-year [1] - The second quarter showed a slight improvement with revenue down 13.56% year-on-year and net profit up 1.15% year-on-year [1] Product Performance - Revenue from various product lines in 1H2025 included: - Livestock skin chew revenue of 232 million yuan (down 11.91%) with a gross margin of 28.08% (up 5.28 percentage points) - Plant-based chew revenue of 221 million yuan (down 25.72%) with a gross margin of 32.07% (up 3.12 percentage points) - Nutritional meat snacks revenue of 217 million yuan (up 14.35%) with a gross margin of 36.62% (up 6.75 percentage points) - Main and wet food revenue of 45 million yuan (down 44.74%) with a gross margin of 33.27% (up 11.04 percentage points) [2] International Business and Brand Strategy - The overseas business faced challenges with a 21% year-on-year decline in foreign sales due to order rhythm from overseas clients, but the company aims to enhance its resilience by expanding non-US customer outreach [2] - The domestic brand continued to grow rapidly, focusing on product innovation with new launches in the first half of the year and plans for further product introductions in the second half [2] Profitability Metrics - The company achieved a gross margin of 31.98% in 1H2025, an increase of 5.63 percentage points, with a second quarter gross margin of 34.76% [3] - The net profit margin for 1H2025 was 11.00%, a decrease of 0.65 percentage points, with a second quarter net profit margin of 14.25% [3] Expense Ratios - The sales expense ratio increased by 1.65 percentage points to 7.66% due to higher investments in the domestic brand [3] - The management expense ratio rose by 2.64 percentage points to 8.53%, primarily due to increased operational expenses from New Zealand's natural products [3] Investment Outlook - The company forecasts net profits of 197 million yuan, 236 million yuan, and 281 million yuan for 2025-2027, with corresponding price-to-earnings ratios of 22.5, 18.7, and 15.8 times based on the closing price on August 26 [3]