CHINA LESSO(HK:02128) Ge Long Hui·2025-09-03 10:22Core Viewpoint - The plastic pipe industry is entering a new structural growth cycle driven by ongoing urbanization and dual infrastructure initiatives in China, with China Liansu positioned as a key player in this sector [1][5]. Industry Trends - Infrastructure investment in China increased by 4.6% year-on-year in the first half of the year, outpacing overall investment growth by 1.8 percentage points, providing strong momentum for upstream and downstream enterprises [1]. - Policies promoting urban renewal and infrastructure development are expected to support the plastic pipe industry's growth, with significant projects in transportation, urban pipeline renovation, and energy transmission [6][8]. - The shift towards green building materials is accelerating the replacement of traditional metal pipes with plastic pipes, which are favored for their energy-saving and environmentally friendly characteristics [7]. Company Performance - China Liansu reported a revenue of 12.475 billion yuan and a gross profit of 3.514 billion yuan in the first half of the year, with a slight increase in gross margin to 28.2% [1]. - The company achieved a net profit attributable to shareholders of 1.046 billion yuan, a year-on-year increase of 0.27% [1]. - The stock price of China Liansu has risen over 50% this year, indicating investor recognition of the company's value potential [1]. Competitive Advantages - China Liansu has established a cost "moat" through "scale procurement + intelligent manufacturing," leveraging its extensive production network across 19 provinces to gain significant bargaining power in raw material procurement [3][4]. - The company has formed long-term strategic partnerships with 3,061 independent distributors, enhancing market coverage and cost efficiency [3]. - Effective cost control measures have led to a 5.21% reduction in overall expenses compared to the previous year, with an improved debt-to-asset ratio of 43.45% [3][4]. Future Outlook - The demand for plastic pipes is expected to continue expanding with the deepening of urban renewal and rural revitalization strategies [8]. - China Liansu's overseas business has become a significant growth driver, with revenue from this segment reaching 675 million yuan, a year-on-year increase of 29.5% [10]. - The company is strategically expanding its presence in Southeast Asia and Africa, capitalizing on local production to meet diverse market demands and reduce transportation costs [11][12]. Market Sentiment - The ongoing "slow bull" market in Hong Kong and increasing global confidence in the Chinese market are creating a favorable environment for investors to recognize the value of China Liansu [14]. - The company's sustained cost advantages, supply chain capabilities, and effective expense management are expected to support profit improvement and attract more investor attention [14].