Event: The company released its 2025 half-year report, achieving operating revenue of 7.9 billion yuan in the first half, up 10.1% year-over-year; net profit attributable to parent company reached 800 million yuan, up 15.7% year-over-year; non-GAAP net profit attributable to parent company was 740 million yuan, up 24.5% year-over-year. In Q2 2025, operating revenue reached 4.11 billion yuan, up 11.2% year-over-year; net profit attributable to parent company was 430 million yuan, up 15.4% year-over-year, while non-GAAP net profit attributable to parent company reached 410 million yuan, up 34.4% year-over-year.
Domestic business continues to improve, overseas maintains high growth rate. 1) By product category, in Q2 2025, yeast and deep-processed products, sugar products, packaging products, and food ingredients and other products achieved operating revenues of 2.98 billion yuan (+11.7%), 230 million yuan (+20.1%), 99 million yuan (+3.6%), and 780 million yuan (+9.3%) respectively. The core yeast business is expected to have improved sequentially from Q1, with YE business maintaining double-digit growth; packaging and food ingredients businesses also showed steady growth. 2) By region, in Q2 2025, domestic and overseas operations achieved revenues of 2.31 billion yuan (+4.3%) and 1.78 billion yuan (+22.3%) respectively. The effectiveness of domestic business adjustments began to show in the second quarter; meanwhile, through localized operations, local marketing teams, and in-depth market research, the company continues to expand its influence in emerging markets such as Africa, the Middle East, and Southeast Asia, driving comprehensive growth in international business.
Raw material price benefits continue, Q2 profitability shows sustained improvement. 1) H1 2025 gross margin was 26.1%, up 1.8pp year-over-year; Q2 2025 gross margin was 26.2%, up 2.3pp year-over-year. The gross margin improvement was mainly due to gradually declining molasses costs and reduced channel promotion activities compared to the same period last year. 2) In terms of expense ratios, Q2 2025 selling expense ratio, administrative expense ratio, and R&D expense ratio were 5.6%, 3.4%, and 4.1% respectively, remaining basically flat year-over-year; financial expense ratio was 0.1%, up 0.2pp year-over-year, mainly due to increased interest expenses. Additionally, government subsidies in H1 2025 amounted to 35 million yuan, down 62.4% year-over-year; affected by changes in government subsidies, the company's non-GAAP net profit margin in the first half performed better, up 1.1pp year-over-year to 9.4%. 3) Overall, the net profit margin in the first half was 10.5%, up 0.6pp year-over-year; Q2 2025 net profit margin was 10.8%, up 0.6pp year-over-year.
Domestic demand expected to continue improving, overseas market expansion showing positive momentum. 1) In terms of capacity, the company is the world's largest YE supplier and second-largest yeast supplier, with total yeast capacity exceeding 450,000 tons and production bases in 16 cities globally, with capacity construction progressing steadily. 2) In terms of costs, domestic molasses prices are likely to decline, while expansion of Egyptian and Russian subsidiaries can further leverage overseas cost advantages. 3) Looking ahead, with continued improvement in domestic yeast market demand and positive overseas expansion momentum, revenue is expected to maintain growth; on the profit side, with continued molasses cost benefits and ongoing optimization of shipping costs, there remains sufficient flexibility going forward.
Earnings forecast and investment recommendation. We forecast EPS for 2025-2027 to be 1.78 yuan, 2.07 yuan, and 2.39 yuan respectively, corresponding to dynamic P/E ratios of 21x, 18x, and 16x respectively. We maintain a "Buy" rating.
Risk factors: Raw material prices may fluctuate significantly; exchange rates may fluctuate significantly; capacity construction progress may fall short of expectations.
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