Core Viewpoint - The company's performance is under short-term pressure due to strategic adjustments, with a decline in revenue and net profit in the first half of 2025 compared to the previous year [1] Group 1: Financial Performance - In the first half of 2025, the company achieved revenue of 1.79 billion yuan, down 7.05% year-on-year, and a net profit attributable to shareholders of 108 million yuan, down 15.16% year-on-year [1] - In Q2 2025, the company reported revenue of 914 million yuan, a decrease of 11.72% year-on-year, and a net profit of 57 million yuan, down 16.07% year-on-year [1] Group 2: Cosmetics Segment - The cosmetics segment generated revenue of 568 million yuan in Q2 2025, down 11.5% year-on-year, with a gross margin of 62.85%, an increase of 2.2 percentage points year-on-year [1] - The Yilian brand achieved revenue of 304 million yuan in Q2, up 23.08% year-on-year, benefiting from successful marketing activities [1] - The Ai'er Doctor brand reported revenue of 215 million yuan in Q2, down 38.75% year-on-year, currently undergoing a strategic adjustment [1] - The new brand Kemi performed well, with sales of collagen products exceeding 14 million yuan in the first half of the year [1] Group 3: Pharmaceutical Segment - The pharmaceutical segment's revenue in Q2 2025 was 99 million yuan, down 24.4% year-on-year, with a gross margin of 48.53%, a decrease of 1.3 percentage points year-on-year [2] Group 4: Raw Materials and Additives Segment - The raw materials and additives segment achieved revenue of 93 million yuan in Q2 2025, up 5.3% year-on-year, with a gross margin of 42.22%, down 6.2 percentage points year-on-year [3] - The growth in this segment was driven by product structure optimization, while the decline in gross margin was due to intensified industry competition [3] - The hyaluronic acid raw material business generated revenue of 116 million yuan in the first half of the year, up 23.4% year-on-year, with high-margin pharmaceutical-grade hyaluronic acid sales increasing significantly [3] Group 5: Overall Financial Metrics - In Q2 2025, the company's gross margin and net profit margin were 53.35% and 7.80%, respectively, with a year-on-year increase of 0.60 percentage points and a decrease of 0.24 percentage points [3] - The overall expense ratio increased due to revenue pressure, with sales, management, and R&D expense ratios rising year-on-year [3] - The company's operational capability and cash flow remained stable [3]

Investment Rating - The investment rating for the company is "Outperform the Market" [5][19][25] Core Views - The company's performance is under short-term pressure due to strategic adjustments, but there are expectations for new product performance in the second half of the year [3][19] - The cosmetics segment showed a revenue decline in Q2 2025, but the brand Yilian performed well, benefiting from successful marketing campaigns [1][7] - The pharmaceutical segment faced revenue decline due to expanded procurement scope and price drops, while the raw materials segment showed growth driven by product structure optimization [2][8] Summary by Sections Financial Performance - In H1 2025, the company achieved revenue of 1.79 billion yuan, down 7.05% year-on-year, and a net profit of 108 million yuan, down 15.16% year-on-year [1][7] - Q2 2025 revenue was 914 million yuan, down 11.72% year-on-year, with a net profit of 57 million yuan, down 16.07% year-on-year [1][7] - The cosmetics segment in Q2 2025 generated revenue of 568 million yuan, down 11.5% year-on-year, with a gross margin of 62.85%, up 2.2 percentage points [1][7] Segment Performance - The cosmetics segment's Yilian brand saw Q2 revenue of 304 million yuan, up 23.08% year-on-year, while the brand Aier Doctor experienced a revenue decline of 38.75% [1][7] - The pharmaceutical segment's Q2 revenue was 99 million yuan, down 24.4% year-on-year, with a gross margin of 48.53% [2][8] - The raw materials and additives segment achieved Q2 revenue of 93 million yuan, up 5.3% year-on-year, with a gross margin of 42.22% [2][8] Future Outlook - The company anticipates that new product launches will help Aier Doctor return to a growth trajectory in the second half of the year [3][19] - The high-margin pharmaceutical-grade hyaluronic acid segment is expected to contribute positively to the raw materials segment's profitability [3][19] - The net profit forecasts for 2025-2027 have been adjusted to 251 million, 294 million, and 332 million yuan, respectively, with corresponding PE ratios of 35, 29, and 26 [3][19]