Investment Rating - The investment rating for the company is "Accumulate" with a downward adjustment [4][7]. Core Views - The company's brand operation business remains stable, but increased expenses have put pressure on profits [1][3]. - The core brand operation business achieved revenue of 4.101 billion yuan, remaining flat year-on-year, while the wholesale distribution business saw a significant decline of 28.85% [2]. - The company has adjusted its revenue and profit forecasts for 2025-2026 due to the ongoing compression of the wholesale business and increased marketing expenses [4]. Financial Performance Summary - For the first three quarters of 2025, the company reported revenue of 5.627 billion yuan, a decrease of 8.41% year-on-year, and a net profit attributable to the parent company of 476 million yuan, down 25.67% [1]. - In Q3 2025, the company achieved revenue of 1.876 billion yuan, a decline of 12.85% year-on-year, but net profit increased by 31.43% to 313 million yuan [1]. - The company’s core brand operation revenue was 4.101 billion yuan, showing a year-on-year growth of 11.08% after adjusting for the two-invoice system [2]. Expense and Profitability Analysis - Increased sales expenses for brand product marketing have contributed to profit pressure, despite a quick growth in net profit in Q3 2025 due to fair value changes in stocks held by the company [3]. - The company has fully recognized inventory impairment for its brand product, paclitaxel polymer micelles, which has impacted profitability [3]. Revenue and Profit Forecast Adjustments - The revenue forecast for 2025-2026 has been revised down from 10.125 billion yuan and 11.625 billion yuan to 7.449 billion yuan and 7.343 billion yuan, respectively [4]. - The net profit forecast for 2025-2026 has been adjusted from 1.066 billion yuan and 1.294 billion yuan to 612 million yuan and 802 million yuan, respectively [4].

Core Viewpoint - The company reported a slight decline in net profit for 2024, attributed to high sales expense ratios, but expects improvement in net profit growth in the future due to brand operations and product promotions [1][3]. Financial Performance - For 2024, the company achieved revenue of 8.094 billion yuan, net profit attributable to shareholders of 692 million yuan, and net profit excluding non-recurring items of 656 million yuan, with adjusted year-on-year changes of -2.0%, -2.9%, and +3.4% respectively [1]. - In Q1 2025, the company reported revenue of 1.841 billion yuan, net profit attributable to shareholders of 85 million yuan, and net profit excluding non-recurring items of 100 million yuan, with year-on-year changes of -0.4%, -54.4%, and -39.5% respectively [1]. Sales and Marketing - The company has seen stable revenue growth in core products, with significant contributions from brand operations, including a 9.2% year-on-year increase in revenue from brand operations to 5.559 billion yuan in 2024 [1]. - Key product performances include: - Diqu: Revenue of 2.101 billion yuan, up 10.7% year-on-year [1]. - Hailu: Revenue of 736 million yuan, up 14.9% year-on-year [1]. - Baiyang Pharmaceutical: Revenue of 953 million yuan, up 25.4% year-on-year [1]. - Nutshuma: Revenue of 121 million yuan, up 45.4% year-on-year [1]. Cost Structure - The sales expense ratio increased in Q1 2025, reflecting a strategic investment in sales efforts, with the sales expense ratio at 19.09%, up 6.44 percentage points year-on-year [2]. - The gross margin improved to 35.82% in Q1 2025, up 6.07 percentage points year-on-year, primarily due to a decrease in the proportion of low-margin wholesale business [2]. Future Outlook - The company maintains a "buy" rating, with adjusted profit forecasts for 2025-2027, predicting net profits of 750 million yuan, 910 million yuan, and 1.05 billion yuan respectively, with year-on-year growth rates of 8.8%, 21.5%, and 15.0% [3]. - The company is expected to benefit from high-value brand operations and a comprehensive product matrix, with a target price of 24.33 yuan based on a 17x PE valuation for 2025 [3].