KinLong(002791)2025-05-06 05:41Investment Rating - The investment rating for the company is "Buy" and is maintained [6]. Core Views - The company reported a revenue of 1.2 billion yuan for Q1 2025, a year-on-year decline of 12%, while the net profit attributable to shareholders was -40 million yuan, reflecting an 11% increase year-on-year. The non-recurring net profit grew by 15% year-on-year [2][4]. Summary by Sections Revenue Performance - The company has experienced continued revenue pressure, with a slight narrowing of the decline. The revenue growth rates over the past five quarters were 1%, -8%, -22%, -23%, and -12%, respectively. This decline is attributed to a persistently weak external environment, with a reported 14% year-on-year decrease in construction area for Q1 [11]. Profitability - The company's profitability remained resilient in Q1, with a gross margin of approximately 30.5%, an increase of 0.1 percentage points year-on-year. Despite rising raw material prices, the company managed to maintain stable profitability through cost reduction and efficiency improvements [11]. Cash Flow - The cash flow situation showed slight improvement, with a net cash flow from operating activities of -440 million yuan, compared to -610 million yuan in the same period last year. The cash collection ratio improved to approximately 1.12 from 1.01 year-on-year [11]. Strategic Positioning - The company is transitioning from an expansion phase to an optimization phase in its product categories. It has made strategic investments in quality enterprises, with long-term equity investments amounting to approximately 400 million yuan by the end of 2024 [11]. Market Strategy - The company adopts a direct sales model in the home improvement and building materials industry, which is inherently volatile. The revenue is sensitive to external economic conditions, particularly in the construction sector [11]. Future Projections - The company is projected to achieve net profits of approximately 180 million yuan, 380 million yuan, and 550 million yuan for the years 2025, 2026, and 2027, respectively, with corresponding valuations of 45, 21, and 15 times [11].