Founder: The basic fundamentals of the health product industry are steadily improving, and the value of sector allocation is becoming increasingly apparent.

The Founder report stated that the nutrition and health product market will continue to maintain high prosperity for a long time, and a trillion-level super market size may give birth to mega-cap companies; the industry chain transformation is timely, with continuous emergence of structural high-growth opportunities, the industry's overall performance gradually stabilizing and breaking through upwards, fundamental improvements supporting the industry entering a period of valuation repair, and the value of sector allocation becoming more prominent. In comparison, taking into account long-term development potential, as well as comprehensive considerations such as short- and medium-term fundamentals and valuation levels, it is recommended to invest in JiYuan Group (603262.SH) and others. Founder's main points are as follows: Global trillion-dollar nutrition and health food market, structural growth opportunities emerging from supply and demand side transformations With changes in economic levels, population structure, and health concepts iterating, the global nutrition and health food market may maintain a compound growth rate of over 5% in the long term, reaching $226.8 billion in 2027. The United States, China, and Europe are the top three regional markets, accounting for nearly 70% of the total share, with Europe and the United States having started early, possessing relatively mature regulatory systems, supply chains, and consumers, while the Chinese market is steadily growing. In various regional markets around the world, changes in consumer groups, consumption demand, and sales channels have led to transformations in both supply and demand sides of the industry, giving rise to structural high-growth opportunities such as DTC brands and e-commerce channels. The nutrition and health food industry's specialized division of labor is mature, with growth in various sectors synchronized with transformations With a history of over a hundred years, the nutrition and health food industry has gradually formed a specialized division of labor system consisting of "upstream raw material suppliers, midstream manufacturers and brand owners, and downstream channel distributors." Among them, the upstream nutrition raw material market benefits from strong demand in the mid-to-lower streams, it is expected to expand at a CAGR of over 6% in the next 6 years, and shows a certain trend of concentration among key suppliers. Regarding the midstream, brand owners have profit margins 20 to 30 percentage points higher than manufacturers, but the market is highly decentralized, with long-tail brands holding a market share of around 40% in the long term. The global contract manufacturing market benefits from this, with the combined market in China and the United States estimated to be around $15 billion, expanding at a compound annual growth rate of around 4%, where leading contract manufacturers with reasonable regional distribution, customer structure, and product structure are expected to gain more market share. Online channels have become the largest sales channel for global nutrition and health food products, with the penetration rate of online channels in the Chinese market even reaching close to 60%. The online nutrition and health food market size is expected to maintain a long-term CAGR of around 20%, with strong growth momentum in emerging online sectors such as content e-commerce and cross-border imports. Industry fundamentals are turning upward, sector and mainstream company allocation values becoming more apparent Industry revenue, profit, and profitability levels and operational conditions have already bottomed out and gradually improved, and overall industry performance is expected to continue to break through to a new stage at a compound growth rate of over 20% in the next 3 years. At the same time, the industry's overall capital structure is relatively reasonable, with low financial risks, and fundamental improvements support gradual valuation repair. Overall, the nutrition and health product industry has considerable long-term growth potential, coupled with the potential for a strong recovery in the short to medium term fundamentals, making sector allocation values more significant. Additionally, there is a certain differentiation within the sector's internal structure, with some companies demonstrating relative advantages that deserve more attention. Risk warning: Uncertainty brought about by changes in regulatory policies, destructive impacts on brands due to product quality issues or false advertising, failing to keep up with ingredient or formulation innovation trends, increased industry competition leading to rising costs and declining profit margins.