Core Viewpoint - Yuwang Biological Nutrition is facing significant challenges as it prepares for its initial public offering in Hong Kong, with declining performance and structural issues impacting its business outlook [2][3]. Financial Performance - Yuwang Biological Nutrition's revenue projections for 2022 to 2024 are 534 million, 661 million, and 832 million RMB, respectively, with net profits of 67.3 million, 102 million, and 125 million RMB, indicating rapid growth [5]. - However, in 2025, the company experienced a sharp decline in revenue to 343 million RMB, a decrease of 27.02%, and a net profit drop of 74.01% to 22.8 million RMB, with adjusted net profit margin falling from 18.6% to 12.6% [7]. - The gross margin decreased significantly from 29.6% in the first half of 2024 to 20.7% in the first half of 2025, primarily due to falling terminal prices and high procurement costs [7]. Product Structure - The company's reliance on its refined fish oil business has decreased, with its revenue share dropping from 36.7% in 2022 to 26.2% in the first half of 2025, while the share of CDMO dietary supplements increased from 59.5% to 70% [9]. - The gross margin for refined fish oil plummeted from 24.7% to 8.3% in the same period, significantly impacting profitability [11]. - The average selling price of CDMO dietary supplements has also declined, with fish oil soft capsules dropping from 136,000 RMB per million capsules in the first half of 2024 to 99,000 RMB in the first half of 2025 [14]. Market Dynamics - The global food-grade fish oil market is maturing, with limited growth prospects. The market size is expected to decline after a brief recovery, with projections indicating a drop to 9.9 billion USD by 2029 [16]. - In China, the food-grade fish oil market is projected to shrink from 25.6 billion RMB in 2023 to 12.9 billion RMB by 2029, indicating a lack of growth potential [18]. - Yuwang Biological Nutrition holds only an 8.1% market share, limiting its pricing power amid intense competition [18]. Operational Challenges - The company is heavily reliant on third-party traders, with 52.1% of its revenue coming from these channels, which poses risks if relationships with these traders weaken [19]. - The company has increased its credit terms to customers, leading to a rise in accounts receivable, which reached 54 million RMB in the first half of the year, exceeding net profits for the same period [20]. - Yuwang Biological Nutrition's liquidity issues and declining performance raise concerns about its upcoming IPO, as it struggles with cost pressures and a lack of bargaining power in the supply chain [20].