Sobute New Materials (SH:603916) HTSC·2025-04-29 07:56Investment Rating - The investment rating for the company is "Buy" with a target price of 9.50 RMB [7][8]. Core Views - The company reported a revenue of 3.555 billion RMB in 2024, a slight decrease of 0.75% year-on-year, and a net profit attributable to shareholders of 95.88 million RMB, down 40.24% year-on-year. The lower profit was attributed to higher impairment losses than previously expected [1]. - In Q1 2025, the company achieved a revenue of 682 million RMB, representing a year-on-year increase of 17.81%, and a net profit of 24.43 million RMB, up 15.36% year-on-year. This indicates a recovery in revenue growth, supported by potential increases in infrastructure investment [1][4]. - The company’s comprehensive gross margin for 2024 was 32.79%, a decrease of 2.33 percentage points year-on-year, primarily due to a decline in capacity utilization [2]. Summary by Sections Revenue and Profitability - The company’s revenue for high-performance water reducers, efficient water reducers, functional materials, and testing services in 2024 was 1.86 billion, 50 million, 670 million, and 760 million RMB respectively, showing a year-on-year decline of 8.8%, 52.0%, an increase of 29.5%, and a slight increase of 0.8% [2]. - The gross margin for high-performance water reducers, efficient water reducers, functional materials, and testing services was 26.79%, 22.42%, 30.47%, and 52.86% respectively, with slight year-on-year changes [2]. Cost Management - The company maintained good control over operating expenses, with a total expense ratio of 25.20% in 2024, down 1.28 percentage points year-on-year. The breakdown includes sales, management, R&D, and financial expense ratios [3]. - The company reported an operating cash inflow of 580 million RMB in 2024, a year-on-year increase of 57.0% [3]. Profit Forecast and Valuation - The profit forecast for the company has been adjusted, with expected net profits for 2025, 2026, and 2027 being 160 million, 210 million, and 240 million RMB respectively, reflecting an upward adjustment of 10% and 6% compared to previous estimates [4]. - The target price of 9.50 RMB is based on a PE ratio of 25 times for 2025, considering the company’s leading position in the additives sector and its potential benefits from infrastructure investments [4].