ORIENTAL YUHONG(002271) -·2025-01-17 02:53Investment Rating - The report maintains a Buy rating for Oriental Yuhong with a target price of RMB 15.65, based on a 20x 2025 expected P/E ratio [5][6] Core Views - Oriental Yuhong's management remains cautious about domestic demand in 2025 but is optimistic about overseas market expansion, targeting overseas revenue of RMB 1.5-2 billion [2][4] - The domestic waterproofing market is expected to remain under pressure in 2025, with demand projected to decline by 10-20% YoY, following a 20-30% decline in 2024 [3] - The company has adjusted its 2025 domestic revenue forecast downward to RMB 30 billion from the previous RMB 32.7 billion [3] Domestic Market Performance - In Q4, Oriental Yuhong achieved positive YoY growth in shipments, with a notable 40% YoY increase in civil building materials [2] - The company has been actively managing accounts receivable, achieving a significant YoY reduction by the end of 2024 [2] Overseas Expansion - Oriental Yuhong is accelerating its overseas expansion, with its US factory (Phase 1) expected to commence operations by September-October 2025 [4] - The company is exploring opportunities to establish additional factories in the US and is actively expanding into Southeast Asia and Saudi Arabia [4] - Despite the overseas expansion, the company plans to maintain cautious capital expenditures and will consider dividend payouts based on cash flow conditions [4] Financial Metrics - The company's market capitalization is RMB 32.0 billion (USD 4.37 billion), with a P/B ratio of 1.1x as of December 2024 [6] - The 52-week stock price range is RMB 17.85-9.86, with a current price of RMB 12.71 as of January 15, 2025 [6] - The report forecasts a 23.1% potential stock price increase and a 0.9% dividend yield, resulting in a total expected return of 24.1% [9] Industry Outlook - The waterproofing industry is undergoing accelerated consolidation due to cash flow pressures, with prices expected to stabilize due to profitability considerations [3]