Investment Rating - The investment rating for the company is "Outperform the Market" [6][26]. Core Views - The company experienced a revenue decline of 7.2% year-on-year in H1 2025, with total revenue reaching 3.22 billion yuan. The segments of waterproof membranes, waterproof coatings, and waterproof engineering construction reported revenues of 1.65 billion, 870 million, and 560 million yuan, respectively, showing declines of 9.8%, 9.2%, and an increase of 2.4% [9]. - The gross margin improved to 24.7%, up by 1.2 percentage points year-on-year, driven by the optimization of product structure and growth in higher-margin overseas and retail businesses [2][12]. - The company has reduced its net cash outflow from operating activities to 560 million yuan, a decrease of 870 million yuan compared to the previous year, indicating improved cash flow management [3][22]. Summary by Sections Financial Performance - In H1 2025, the company reported a net profit attributable to shareholders of 47 million yuan, down 50% year-on-year, with a basic earnings per share (EPS) of 0.04 yuan. The non-recurring net profit was -14 million yuan, a decline of 132.9% year-on-year [9]. - The comprehensive gross margin for H1 2025 was 24.7%, with quarterly margins of 24.4% and 24.9% for Q1 and Q2, respectively [2][12]. - The company’s operating expenses ratio was 18.1%, an increase of 0.74 percentage points year-on-year, influenced by a decline in revenue [2]. Cash Flow and Receivables - The company achieved a net cash flow from operating activities of -560 million yuan, significantly improved from the previous year's outflow [3][22]. - As of H1 2025, total receivables decreased to 5.06 billion yuan, down 430 million yuan year-on-year, reflecting efforts to optimize revenue structure and improve collection quality [3][22]. Future Outlook - The company is expected to benefit from price increases driven by industry trends and has initiated plans for overseas production, including the completion of a manufacturing base in Malaysia [26]. - The earnings per share (EPS) forecast for 2025-2027 is adjusted to 0.13, 0.24, and 0.34 yuan, with corresponding price-to-earnings (PE) ratios of 38.2, 21.5, and 15.2 times [26].

Industry Overview - Self-adhesive membranes are a new type of waterproof material characterized by low-temperature flexibility, self-healing properties, and strong adhesion, allowing for quick construction at room temperature and compliance with environmental standards [1][2] - The production of self-adhesive membranes in China is projected to grow from 402 million square meters in 2015 to 1.477 billion square meters by 2024, driven by advancements in technology and expanding applications [1][8] Industry Development History - The self-adhesive membrane industry in China began in the 1990s with the introduction of products from international brands, followed by local production efforts [4] - By 2000, advancements in technology led to mass production of self-adhesive waterproof membranes, and industry standards were established in 2002 to ensure product quality [4][5] Industry Supply Chain - The supply chain consists of upstream raw material suppliers (asphalt, polymer resins, polyethylene films), midstream manufacturers who produce various self-adhesive membrane products, and downstream applications in construction and infrastructure [6] - The production of petroleum asphalt, a key component, has seen fluctuations, with a projected output of 34.508 million tons in 2024, down from 62.88 million tons in 2020 [6][7] Market Demand and Trends - The self-adhesive membrane industry is closely linked to the real estate sector, which is currently experiencing a downturn, impacting demand [7] - However, infrastructure investment remains robust, with a 3.2% year-on-year growth in the first half of 2025, providing some demand for self-adhesive membranes [7][8] Competitive Landscape - Major players in the self-adhesive membrane industry include Beijing Oriental Yuhong Waterproof Technology Co., Ltd. and Keshun Waterproof Technology Co., Ltd., which leverage technology and brand strength to maintain market leadership [9][11] - Smaller companies focus on niche products and regional markets due to limited resources compared to larger firms [9] Future Industry Trends - The industry is expected to see increased concentration as stricter environmental regulations and rising production costs lead to the elimination of less competitive firms [14] - Companies are expanding internationally to seek new growth opportunities, with notable efforts from leading firms to establish overseas operations [15] - Government policies are increasingly supportive of high-performance waterproof materials, enhancing the growth prospects for self-adhesive membranes [16]

Core Viewpoint - The company reported a decline in revenue and net profit for the first half of 2025, indicating challenges in the market and a need for operational adjustments [1][2][4]. Group 1: Financial Performance - In H1 2025, the company achieved revenue of 3.22 billion yuan, a decrease of 7.2% year-on-year, and a net profit attributable to shareholders of 50 million yuan, down 50% year-on-year, with a net profit excluding non-recurring items turning negative [1]. - The operating cash flow for H1 2025 was -560 million yuan, an improvement of 890 million yuan year-on-year [1]. - For Q2 2025, revenue was 1.83 billion yuan, down 8.1% year-on-year, with a net profit of 10 million yuan, a decline of 84.3% year-on-year, and a negative net profit excluding non-recurring items [1]. Group 2: Business Adjustments - In response to weak industry demand, the company is actively adjusting its business structure, stabilizing product pricing, tightening credit policies, and enhancing customer risk management to promote high-quality development [2]. - In H1 2025, revenue from waterproof membranes, waterproof coatings, and engineering construction was 1.65 billion yuan, 870 million yuan, and 560 million yuan, respectively, with declines of 9.8%, 9.2%, and an increase of 2.4% [2]. Group 3: Profitability and Cost Management - The company's gross margin for H1 2025 was 24.7%, an increase of 1.2 percentage points year-on-year, attributed to revenue structure optimization and growth in high-margin overseas and retail businesses [3]. - The expense ratio for the period was 18.1%, up 0.7 percentage points year-on-year, with specific expense ratios for sales, management, finance, and R&D being 8.2%, 5.0%, 0.8%, and 4.0%, respectively [3]. - The net profit margin for H1 2025 was 1.3%, down 1.2 percentage points year-on-year, while Q2 2025 saw a gross margin of 24.9% and a net profit margin of 0.2% [3]. Group 4: Future Outlook - Due to weak downstream demand and intense market competition, the company has revised its net profit forecasts for 2025 and 2026 to 104 million yuan and 277 million yuan, respectively, representing decreases of 72% and 45% from previous estimates [4]. - The company anticipates benefiting from a recovery in the real estate sector and aims to enhance operational quality and optimize its business structure [4].

Core Insights - The report maintains a positive outlook on the building materials sector, emphasizing the potential for recovery in consumer building materials and cement industries [1][4] - The performance of consumer building materials has shown significant differentiation, with companies like Sanke Tree demonstrating strong alpha, while the overall market remains under pressure due to real estate challenges [6][7] - The cement industry has experienced a notable decline in costs, leading to a counterintuitive increase in net profits despite lower production levels [6][8] Consumer Building Materials - In H1 2025, the performance of consumer building materials was mixed, with Sanke Tree outperforming its peers due to an optimized competitive landscape and strong brand effects [6][7] - The real estate sector remains under pressure, with a reported decline in construction and sales areas of 16.5% and 4.0% year-on-year respectively [6][7] - Sanke Tree's gross margin improved significantly, with increases of 2.7 and 4.3 percentage points in Q1 and Q2, attributed to high-margin products and enhanced service quality [6][7] - Other companies like Rabbit Baby also saw stable performance due to product structure optimization, while competition in waterproofing and piping remains intense [6][7] Cement Industry - The cement sector faced a "strong then weak" trend in H1 2025, with production down 4.3%, marking the lowest level since 2010 [6][8] - Despite revenue declines for major players like Conch Cement and Huaxin Cement, gross margins improved due to falling coal prices, resulting in profit growth for these companies [6][8] - The average price per ton for major cement companies increased year-on-year, with Conch Cement and Huaxin Cement seeing price rises of 5.6 and 25.7 respectively [6][8] - Starting in August, some regions began to raise prices, indicating potential improvements in supply-demand dynamics for the second half of the year [8]

Market Overview - On September 1, the renovation and building materials sector rose by 0.01% compared to the previous trading day, with Kexin New Materials leading the gains [1] - The Shanghai Composite Index closed at 3875.53, up 0.46%, while the Shenzhen Component Index closed at 12828.95, up 1.05% [1] Top Gainers in the Sector - Kexin New Materials (833580) closed at 17.19, up 17.42% with a trading volume of 142,500 shares and a transaction value of 228 million yuan [1] - Beijing Lier (002392) closed at 8.83, up 9.96% with a trading volume of 540,400 shares and a transaction value of 46.9 million yuan [1] - Other notable gainers include Yabao Ceiling (002718) up 2.85%, and Puren Co. (002225) up 2.26% [1] Top Losers in the Sector - Beixin Building Materials (000786) closed at 26.27, down 1.61% with a trading volume of 178,000 shares [2] - Sankeshu (603737) closed at 47.93, down 1.50% with a trading volume of 55,400 shares [2] - Other notable losers include Zhongtie Assembly (300374) down 1.29%, and Ruitai Technology (002066) down 0.92% [2] Capital Flow Analysis - The renovation and building materials sector experienced a net outflow of 171 million yuan from institutional investors, while retail investors saw a net inflow of 101 million yuan [2] - Speculative funds had a net inflow of 69.83 million yuan into the sector [2]

Core Viewpoint - The company reported a decline in revenue for H1 2025, but a significant increase in net profit, indicating a mixed performance amid ongoing industry price competition [1][2]. Group 1: Financial Performance - In H1 2025, the company achieved revenue of 3.22 billion yuan, a year-over-year decrease of 7.23%, while net profit attributable to shareholders was 46.96 million yuan, up 49.98% year-over-year [1]. - The second quarter saw revenue of 1.83 billion yuan, down 8.10% year-over-year but up 30.83% quarter-over-quarter [1]. - The comprehensive gross margin for H1 2025 was 24.68%, an increase of 1.23 percentage points year-over-year, attributed to an optimized revenue structure and increased high-end market sales [2]. Group 2: Revenue Structure and Cost Management - Revenue from waterproof membranes and coatings decreased by 9.79% and 9.15% respectively, while construction business revenue increased by 2.36% [2]. - The company’s operating expenses ratio was 18.06%, up 0.74 percentage points year-over-year, with sales expenses increasing due to enhanced market development efforts [2]. - Financial expenses decreased by 49.56% year-over-year, primarily due to reduced interest expenses [2]. Group 3: Strategic Initiatives - The company established a 240 million yuan investment in a 481 million yuan industrial merger fund to target cutting-edge technology sectors, aiming to drive innovation and efficiency [3]. - The company is focusing on the renovation of old residential areas to capture demand in the home decoration materials market, reinforcing its leading position in the waterproof materials sector [3]. Group 4: Profit Forecast and Valuation - The company revised down its net profit forecasts for 2025-2027 by 27.65%, 10.23%, and 4.31% to 184 million, 330 million, and 433 million yuan respectively [4]. - The target price was adjusted to 5.81 yuan, based on a 35 times PE valuation for 2025, reflecting a higher valuation average among comparable companies [4].

Investment Rating - The investment rating for the company is "Accumulate" (maintained) [2] Core Views - The company is experiencing revenue pressure due to a contraction in demand, with a proactive tightening of engineering business operations. The revenue for 1H2025 was 3.22 billion yuan, a year-on-year decrease of 7.23%, and the net profit attributable to shareholders was 47 million yuan, down 49.98% [7][9] - The overall gross margin improved to 24.68%, an increase of 1.23 percentage points, attributed to the company's focus on high-end markets and premium projects, as well as a 2.18% decrease in raw material costs [7][9] - The company has announced price increases for certain waterproofing products, which is seen as a response to raw material pressures and a move to combat low-price competition in the industry [9] Financial Performance Summary - Revenue forecast for 2025 is 6.48 billion yuan, with a projected decline of 5.17% year-on-year, followed by a recovery in 2026 and 2027 with growth rates of 10.34% and 10.39% respectively [6][10] - The net profit attributable to shareholders is expected to be 93 million yuan in 2025, with significant growth projected in the following years, reaching 264 million yuan by 2027 [6][10] - Earnings per share (EPS) is forecasted to be 0.08 yuan in 2025, increasing to 0.24 yuan by 2027, with corresponding price-to-earnings (PE) ratios of 63.18x, 32.18x, and 22.35x for the next three years [6][10] Market Performance - The company's stock has shown a performance of -4% over the last 12 months, compared to a 10% increase in the market benchmark [4]

Investment Rating - The investment rating for the company is maintained as "Accumulate" with a target price of RMB 5.81 [7][9]. Core Views - The company reported a revenue of RMB 3.22 billion for H1 2025, a year-on-year decrease of 7.23%, and a net profit attributable to shareholders of RMB 46.96 million, down 49.98% year-on-year. The second quarter saw a revenue of RMB 1.83 billion, a year-on-year decline of 8.10% but a quarter-on-quarter increase of 30.83% [1][7]. - The decline in revenue is attributed to ongoing price competition in the industry and slow recovery in pricing by leading companies. However, with the narrowing decline in new construction area, demand for waterproof materials is expected to stabilize [1][2]. Summary by Sections Revenue and Profitability - The revenue structure for H1 2025 showed a decline in sales of waterproof rolls and coatings by 9.79% and 9.15% respectively, while construction services increased by 2.36%. The overall gross margin improved to 24.68%, up 1.23 percentage points year-on-year, due to optimized revenue structure and increased sales in high-end markets [2][3]. - The company’s gross margin for waterproof materials was 28.17%, an increase of 2.70 percentage points year-on-year, while the margin for construction services was 7.67%, down 6.11 percentage points [2]. Financial Health - The company’s expense ratio for H1 2025 was 18.06%, up 0.74 percentage points year-on-year, with a significant reduction in financial expenses by 49.56% due to decreased interest payments. The net profit margin was 1.46%, down 1.25 percentage points year-on-year [3]. - The company’s asset-liability ratio stood at 69.4%, an increase of 5.5 percentage points year-on-year, while accounts receivable decreased by 7.48% to RMB 4.36 billion [3]. Strategic Initiatives - The company has established an industrial merger and acquisition fund with a total scale of RMB 481 million to invest in cutting-edge technology, aiming to drive innovation and improve efficiency. This move is in response to the market's shift towards renovation and upgrading of existing housing stock [4]. - The company is focusing on a strategy prioritizing civil construction, which is expected to capture the demand for renovation materials in the home decoration market, thereby reinforcing its leading position in the waterproof materials sector [4]. Earnings Forecast and Valuation - The company’s net profit forecasts for 2025-2027 have been revised downwards by 27.65%, 10.23%, and 4.31% respectively, with expected profits of RMB 184.29 million, RMB 330.45 million, and RMB 432.95 million [5][12]. - The company is assigned a PE ratio of 35 times for 2025, leading to an upward adjustment of the target price to RMB 5.81 [5].

Group 1 - The core point of the article is that Keshun Co., Ltd. (SZ 300737) held its 16th meeting of the 4th board of directors on August 28, 2025, to review the semi-annual report and summary for 2025 [1] - For the first half of 2025, Keshun's revenue composition was as follows: waterproof materials accounted for 78.2%, waterproof engineering construction accounted for 17.31%, and other businesses accounted for 4.49% [1]

Core Viewpoint - The company has announced the appointment of a new auditing firm for the fiscal year 2025, indicating a strategic move to enhance its financial oversight and internal control processes [1]. Group 1 - The company will hold its fourth board meeting on August 28, 2025, to review and approve the proposal for the appointment of the auditing firm [1]. - The board has agreed to appoint Deloitte as the auditing firm for the fiscal year 2025, responsible for the company's financial report audit and internal control audit [1]. - The appointment is set to take effect for one year, starting from the date of approval by the shareholders' meeting [1].