Investment Rating - The report maintains a "Strong Buy" investment rating for the company [1][7][3] Core Views - The profitability of the downstream breeding sector is gradually improving, leading to a continuous recovery in the company's performance for the first half of 2025. The company achieved a revenue of 487 million yuan, representing a year-on-year increase of 22%, and a net profit attributable to shareholders of 220 million yuan, up 44% year-on-year [7] - The improvement in demand and the rich product matrix have contributed to a sequential improvement in gross margin, which increased by 2.83 percentage points to 68.7% in Q2 2025. The company has also received four new veterinary drug registration certificates, including new vaccines for pigs, which are expected to contribute to profit growth [7] - The anti-involution policy may boost pig prices, which could enhance the demand for animal health products and improve the overall breeding sector's profitability, positively impacting the company's performance [7] Financial Data and Valuation - The company’s total revenue is projected to be 1,064 million yuan in 2023, with a year-on-year growth of 6%. However, a decline of 11% is expected in 2024, followed by a recovery with growth rates of 24%, 14%, and 11% in 2025, 2026, and 2027 respectively [2][13] - The net profit attributable to shareholders is forecasted to be 396 million yuan in 2023, with a slight decline of 3% in 2024, and then a recovery with growth rates of 16%, 14%, and 16% in the following years [2][13] - The company’s price-to-earnings (PE) ratio is expected to decrease from 21.6 in 2023 to 14.5 by 2027, indicating an improving valuation over time [2][14] Stock Performance - The company's stock has shown an absolute performance increase of 55% over the past 12 months, outperforming the benchmark index [5]