**Event** The company achieved operating revenue/net profit attributable to shareholders/adjusted net profit of RMB 7.899/0.799/0.742 billion in the first half of 2025, representing year-over-year growth of 10.1%/15.66%/24.49%. In Q2 alone, the company recorded operating revenue/net profit attributable to shareholders/adjusted net profit of RMB 4.105/0.429/0.405 billion, up 11.19%/15.35%/34.39% year-over-year. Q2 revenue growth outpaced Q1, with even stronger profit growth performance.
**Investment Highlights**
**Steady Growth in Core Yeast Business, Outstanding Overseas Performance** By product segment, yeast and deep processing/sugar/packaging businesses generated revenues of RMB 5.754/0.384/0.194 billion respectively in H1 2025, representing year-over-year changes of +12.38%/-34.64%/-0.48%. The core yeast business maintained solid double-digit growth, while the low-margin sugar business was further divested. By channel, offline/online revenues reached RMB 5.74/2.126 billion respectively in H1 2025, up +19.23%/-8.52% year-over-year. By market, domestic/overseas revenues totaled RMB 4.404/3.462 billion respectively in H1 2025, growing +2.07%/+22.6% year-over-year. The seemingly modest domestic growth was impacted by sugar business divestment, while organic business continued rapid expansion. Overseas markets sustained the high growth trend from early this year, aligning with full-year guidance expectations.
The company previously acquired a 55% stake in Shengtong Sugar Industry, further optimizing sugar operations and integrating upstream and downstream supply chains. This move helps secure upstream raw materials, enhances sustainable profitability and comprehensive competitiveness, and supports the company's steady development.
**Cost Benefits Realized, Q2 Gross Margin Further Recovers to High Levels** Excluding equity incentive expenses, H1 2025 net margin reached 10.46%, up 0.62 percentage points year-over-year on a comparable basis. In H1 2025, the company's gross margin/net margin attributable to shareholders stood at 26.09%/10.12%, up 1.8/0.49 percentage points year-over-year respectively. Sales/administrative/R&D/financial expense ratios were 5.58%/3.43%/3.87%/0.09% respectively, representing year-over-year changes of 0.4/0.02/-0.24/-0.11 percentage points.
In Q2 2025, gross margin/net margin attributable to shareholders reached 26.19%/10.46%, up 2.27/0.38 percentage points year-over-year respectively. Sales/administrative/R&D/financial expense ratios were 5.57%/3.37%/4.12%/0.08% respectively, representing year-over-year changes of 0.08/0.23/0.03/0.23 percentage points.
**Earnings Forecast and Investment Rating** We maintain our 2025-2027 operating revenue forecasts at RMB 17.049/18.882/20.668 billion, representing year-over-year growth of +12.19%/10.75%/+9.46%. We maintain our 2025-2027 net profit attributable to shareholders forecasts at RMB 1.651/1.917/2.201 billion, representing year-over-year growth of +24.62%/+16.14%/+14.80%. This corresponds to three-year EPS of RMB 1.90/2.21/2.54 respectively, with current stock price P/E ratios of 20x/17x/15x respectively. We maintain our "Buy" rating.
**Risk Factors:** Food safety risks; intensified market competition risks; raw material price volatility risks.
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