Investment Rating - The report maintains an "Outperform" rating for the company [1]. Core Views - The company reported H1 2025 results that met expectations, with revenue of 320 million yuan, down 22.4% year-on-year, and a net profit of 40 million yuan, down 49.7% year-on-year. Q2 2025 revenue was 180 million yuan, down 10.9% year-on-year but up 38.5% quarter-on-quarter, indicating a sequential improvement in performance [4][7]. - The company is expected to benefit from growth in three key sectors: aviation, marine equipment, and civil aviation, with new product launches and market expansions driving future revenue [7]. Financial Data and Profit Forecast - Revenue projections for 2025E are set at 950 million yuan, with a year-on-year growth rate of 17.5%. The net profit forecast for 2025E is 170 million yuan, reflecting an 11.8% increase year-on-year [6]. - The company’s gross margin for H1 2025 was 34.32%, a decrease of 4.8 percentage points compared to H1 2024, primarily due to product mix adjustments. The net profit margin was 12.76%, down 6.94 percentage points year-on-year [7]. - The company is projected to achieve net profits of 170 million yuan in 2025, 237 million yuan in 2026, and 333 million yuan in 2027, with corresponding price-to-earnings ratios of 64, 46, and 33 times [7].

Core Insights - A-share mid-year report shows revenue and net profit growth remains positive, but the proportion of loss-making stocks is still high [2][10] - The overseas revenue share of A-shares reached a record high of 13.4% in 2025, indicating a trend towards internationalization [10] - The pet food industry is experiencing a trend towards "micro-innovation" and "precision nutrition," with a focus on premium products [3][16] A-share Market Analysis - A-share revenue growth peaked in Q1 2021 at 44.8% and has been on a downward trend for 14 consecutive quarters, with a slight recovery in 2025 [10] - The proportion of loss-making companies in A-shares reached 29.4% in Q2 2025, the highest since 2008 [10] - The profitability of the main board is under pressure, while the Sci-Tech Innovation Board is showing signs of recovery [10] Pet Food Industry Insights - The 27th Asia Pet Expo in 2025 saw a record number of exhibitors but a decline in the number of participating brands, indicating increased industry concentration [12][3] - Major brands like Guibao Pet and Zhongchong Co. are focusing on product upgrades and expanding their market presence [3][12] - The trend of "small dog economy" is rising, with leading brands increasing their focus on dog food products [16] Financial Performance of Key Companies - The report highlights that companies like Boss Electric and Wanhe Electric are maintaining stable profitability despite market challenges [22][24] - The pet food sector is seeing significant product innovation, with brands launching new premium products to cater to evolving consumer preferences [3][16] - The overall cash flow and operating cash return in A-shares have improved, indicating better financial health among companies [13]