ORIENTAL YUHONG(002271)2024-10-23 00:23Investment Rating - The report maintains an "Accumulate" rating for the company [2]. Core Viewpoints - The company is a leading player in the waterproof materials industry with significant competitive advantages, including scale, channel, product variety, and profitability [1][4]. - Demand is expected to recover due to policy relaxations and new waterproof standards, which will likely enhance market concentration and the company's market share [1][21]. - The company's retail business is growing rapidly, providing new growth momentum alongside the recovery in real estate demand [1][4]. Summary by Sections 1. Company Overview - The company, established in 1995, is the leading waterproof materials enterprise in China, with a revenue CAGR of 29.1% from 2008 to 2023 [12]. - The product matrix includes waterproof materials, building coatings, mortar powders, and more, covering various construction phases [12]. 2. Market Demand Recovery - The report anticipates a recovery in real estate demand due to recent policy relaxations, with new construction and completion areas expected to grow by 3-4% and 6-7% year-on-year in 2025-2026, respectively [21][23]. - The implementation of new waterproof regulations is projected to increase the demand for waterproof materials by over 70% [1][29]. 3. Retail Business Growth - The company has a robust retail channel, with over 270,000 members in its "Honggehui" system, and has expanded its distribution network significantly [1]. - Retail revenue reached 5.438 billion yuan in H1 2024, a year-on-year increase of 7.66% [1]. 4. Financial Projections - Revenue projections for 2024-2026 are 30.714 billion, 33.525 billion, and 37.073 billion yuan, with corresponding net profits of 2.376 billion, 2.949 billion, and 3.444 billion yuan [4][3]. - The company's current P/E and P/B ratios are at historically low levels, indicating potential for valuation recovery [4]. 5. Competitive Advantages - The company holds a 25% market share in the waterproof materials sector, significantly outperforming its closest competitor [1]. - The company benefits from a strong incentive mechanism for its sales team, leading to higher productivity compared to competitors [1].