Core Viewpoint - The report highlights that Xiangfenghua's performance in H1 2025 has been negatively impacted by rising raw material costs and a slowdown in downstream demand, leading to a decrease in revenue and profitability [1][2]. Financial Performance - In H1 2025, the company achieved revenue of 688 million yuan, a year-on-year decrease of 2.8%, with a net profit attributable to shareholders of -3 million yuan, down 107.7% year-on-year [1]. - The gross profit margin fell to 12.4%, a decline of 6.23 percentage points compared to the previous year, while the net profit margin was -0.4%, down 109.03 percentage points year-on-year [1]. - In Q2 2025, revenue was 382 million yuan, showing a year-on-year increase of 1.9% and a quarter-on-quarter increase of 24.7%, but net profit attributable to shareholders dropped to 5 million yuan, down 79.5% year-on-year [1][2]. Industry Context - The company specializes in the anode material sector, particularly in graphite anodes, which accounted for 99.5% of total business volume, facing a decline of 3.04% year-on-year due to a slowdown in downstream industries and increased competition [2]. - The price of upstream petroleum coke has significantly increased, leading to a sharp decline in gross profit margin, from 22.6% in 2024 to 12.4% in H1 2025 [2]. Future Outlook - The company is exploring next-generation non-graphite anode materials, such as silicon-based anodes, which have a theoretical capacity of 4200 mAh/g, significantly higher than graphite [2]. - The company has begun to engage in new carbon material fields, including silicon-carbon anodes and graphene, and has established basic conditions for industrialization [2]. Investment Recommendation - The company is recognized as an important supplier of anode materials in the industry, with a solid technology base in graphite anodes and a commitment to developing new carbon materials [3]. - Revenue projections for 2025-2027 are estimated at 1.5 billion, 1.7 billion, and 1.8 billion yuan, with net profits of 50 million, 60 million, and 90 million yuan respectively [3].