Investment Rating - The report maintains a "Recommended" rating for the company, with a current price of 44.30 CNY and a projected P/E ratio of 18/17/15X for the years 2025 to 2027 [6][4]. Core Views - The company is adjusting its growth pace to alleviate channel pressure amid a contraction in the industry, focusing on long-term healthy development. It is clearing channel inventory and enhancing its presence in out-of-province markets, which have shown growth despite overall industry challenges [2][4]. - The company has increased its investment in marketing and channel support, maintaining a stable gross margin of 73.4% in the first half of 2025, despite a slight year-on-year decrease [3][4]. - The financial forecasts predict a decline in revenue for 2025, with expected revenues of 10.91 billion CNY, down 5.5% from the previous year, and a projected net profit of 3.13 billion CNY, down 8.4% [5][10]. Summary by Sections Financial Performance - In the first half of 2025, the company reported revenues of 6.95 billion CNY, a decrease of 4.8% year-on-year, and a net profit of 2.23 billion CNY, down 9.5% [1][2]. - The second quarter of 2025 saw revenues of 1.85 billion CNY, with net profit and adjusted net profit both at 0.59 billion CNY, reflecting declines of 29.7% and 36.5% respectively [1][2]. Product and Market Analysis - Revenue from the company's premium A+ products was 4.31 billion CNY, down 7.4% year-on-year, while the A product line saw a slight increase of 0.7% to 2.23 billion CNY [2]. - The company is expanding its presence in out-of-province markets, achieving 0.63 billion CNY in revenue, a growth of 4.8% year-on-year, indicating a positive trend in brand momentum [2][3]. Cost and Margin Management - The gross margin for the first half of 2025 was 73.4%, with a slight decrease of 0.4 percentage points year-on-year. The net profit margin was 32.1%, down 1.6 percentage points [3][4]. - The sales expense ratio increased to 14.8%, reflecting a rise of 1.4 percentage points year-on-year, while the management expense ratio was 3.0%, up 0.2 percentage points [3].