ORIENTAL YUHONG(002271) EBSCN·2024-09-02 06:15Investment Rating - The report maintains a "Buy" rating for the company [3] Core Views - The company has shown a commitment to channel transformation, resulting in continuous improvement in cash flow [1] - Despite a decline in revenue and net profit, the company is focusing on retail and engineering growth, with a notable increase in cash flow [1] - The company is positioned as a leader in the waterproofing industry, with expectations for marginal improvements in operations [1] Summary by Sections Financial Performance - In H1 2024, the company achieved revenue of 15.22 billion yuan, a decrease of 9.7% year-on-year, and a net profit attributable to shareholders of 0.94 billion yuan, down 29.3% year-on-year [1] - The operating cash flow for H1 2024 was -1.33 billion yuan, an improvement of 2.62 billion yuan year-on-year [1] - For Q2 2024, revenue was 8.07 billion yuan, a decline of 13.8% year-on-year, with a net profit of 0.60 billion yuan, down 37.2% year-on-year [1] Product and Channel Analysis - Revenue from waterproof membranes, coatings, mortar, and engineering construction in H1 2024 was 6.05 billion, 4.76 billion, 2.13 billion, and 1.26 billion yuan respectively, with declines in waterproof membranes and coatings but growth in mortar [1] - Retail and engineering channels saw revenue growth of 7.7% and 9.1% respectively, while direct sales and other businesses experienced significant declines [1] Profitability and Cost Management - The overall gross margin for H1 2024 was 29.2%, a slight increase of 0.3 percentage points year-on-year [1] - The expense ratio increased to 18.6%, up 2.2 percentage points year-on-year, primarily due to higher advertising, travel, and employee compensation costs [1] - The net profit margin for H1 2024 was 6.1%, down 1.8 percentage points year-on-year [1] Future Outlook - The company is accelerating channel transformation and focusing on project quality while expanding retail channels [1] - The report suggests monitoring for signs of marginal improvement in operations as the company navigates the current industry downturn [1] - Profit forecasts for 2024-2026 have been adjusted to 1.905 billion, 2.435 billion, and 3.003 billion yuan respectively, reflecting anticipated challenges in demand and competition [1]