Group 1: Brand Strategy - The brand Winona Baby will continue to focus on pediatric dermatology, specifically addressing infant eczema, and aims to provide comprehensive skincare solutions segmented by season, area, and age [3] - AOXMED will deepen its product matrix in 2025, targeting professional clinics and home care scenarios, with plans to launch new products based on anti-aging concepts [3] - The company has opened 179 new direct-operated stores by the end of last year, focusing on core business districts in first and second-tier cities [3] Group 2: Distribution Channels - As of last year, the OTC distribution channel has covered over 129,000 pharmacies nationwide [3] - The average transaction value on the OMO online sales platform exceeded RMB 1,500, demonstrating strong market penetration [3] Group 3: Technological Innovation - The company collaborates with 63 top-tier hospitals for clinical validation of Winona products, resulting in nearly 500 published academic papers and participation in the formulation of 68 group standards [4] - AI systems are utilized to enhance production speed and blockchain technology is employed to combat counterfeit products, ensuring consumer rights [4] - The company has established research centers in France and Japan and has received international innovation awards for its unique ingredients [4]

Core Viewpoint - The company reported disappointing financial results for 2024 and Q1 2025, with revenue growth stagnating and significant declines in net profit due to asset impairment losses and increased marketing expenses [1][3]. Financial Performance - For 2024, the company achieved revenue of 5.74 billion, a year-on-year increase of 3.9%, but net profit attributable to shareholders fell by 33.5% to 500 million [1]. - In Q1 2025, revenue was 950 million, down 13.5% year-on-year, with net profit dropping 84.0% to 28 million [1]. - The decline in net profit was primarily attributed to underperformance of Yujing Investment, leading to asset impairment losses, alongside increased sales expenses from brand promotion and online channel investments [1]. Development Trends - The main brand, Winona, focused on core products, with revenue declining by 5.5% to 4.9 billion in 2024, while sub-brands showed growth, with Winona Baby increasing by 34.0% to 200 million and AOXMED rising by 65.6% to 60 million [2]. - Online sales grew by 10.1% in 2024, with Douyin channel sales up 31%, while offline sales declined [2]. Profitability and Cost Management - Gross margin improved significantly in Q1 2025, reaching 77.5%, up 5.4 percentage points year-on-year, due to a focus on core products and price stability [3]. - However, the sales expense ratio increased, with a rise of 2.7 percentage points to 50.0% in 2024 and 9.3 percentage points to 56.0% in Q1 2025, driven by increased promotional and membership operation costs [3]. - The company faced asset impairment losses of 90 million and 25 million from goodwill and intangible assets, respectively, impacting net profit margins [3]. Strategic Outlook - The company plans to streamline its product matrix and optimize channel strategies, focusing on reducing promotional intensity and improving online operational efficiency [4]. - There is an emphasis on expanding the second-tier brands like Winona Baby and AOXMED, with attention on future operational improvements [4]. Earnings Forecast and Valuation - The company has lowered its net profit forecasts for 2025 and 2026 by 22% and 17% to 670 million and 790 million, respectively [5]. - The current stock price corresponds to a P/E ratio of 26x for 2025 and 22x for 2026, with a target price adjustment down by 12% to 53 yuan, indicating a potential upside of 31% [5].