CHINA LESSO(02128) 天风证券·2024-09-01 10:17Investment Rating - The investment rating for China Liansu (02128) is "Buy" with a target price of 2.79 HKD, maintaining the rating for the next six months [1]. Core Views - The report highlights that the company's performance is temporarily under pressure due to weak downstream demand, but there is optimism regarding its overseas expansion prospects [1]. - Revenue for the first half of 2024 is reported at 13.564 billion, a year-on-year decrease of 11.33%, with EBITDA at 1.283 billion, down 23.64%, and net profit attributable to shareholders at 1.043 billion, down 30.16% [1]. - The company has established over 30 advanced production bases and has a wide distribution network across the country, with an increase in independent exclusive distributors from the beginning of the year to 2,891 [1]. Summary by Sections Financial Performance - The company has adjusted its profit forecast for 2024-2026, expecting net profits of 2.08 billion, 2.28 billion, and 2.51 billion respectively, with corresponding PE ratios of 5.5, 5.1, and 4.6 times [1]. - The revenue breakdown for the first half of 2024 shows plastic pipeline systems, building materials, environmental protection, supply chain services, and new energy generating revenues of 11.219 billion, 1.080 billion, 0.131 billion, 0.769 billion, and 0.157 billion respectively, with year-on-year changes of -8.3%, -19.4%, -25.57%, +32.82%, and -78.76% [1][2]. Market and Competitive Landscape - The report notes that raw material prices are at low levels, impacting gross margins due to industry competition [1]. - The average selling price of plastic pipeline systems decreased by 266 to 9,330 per ton, with total sales volume down by 5.7% [1]. - The company has seen significant growth in overseas markets, particularly in Southeast Asia and Africa, with production bases established in Indonesia, Cambodia, Thailand, and Malaysia, and plans for local production in Tanzania and Vietnam [1]. Cost Structure and Profitability - The company’s expense ratio for the first half of 2024 is reported at 18.81%, with a net profit margin of 7.5%, down from the end of 2023 [1]. - The debt-to-asset ratio is reported at 46.8%, a decrease of 3.0% year-on-year, indicating an ongoing optimization of the debt structure [1].