SKSHU(SH:603737) Great Wall Securities·2025-08-20 09:35Investment Rating - The report maintains a "Buy" rating for the company, expecting a stock price increase of 5% to 15% relative to the industry index over the next six months [4]. Core Views - The company has significantly improved its performance year-on-year, with a notable upgrade in product structure. The strategic transformation has yielded positive results, particularly in retail and engineering business segments [3][4]. - The company achieved a revenue of 5.816 billion yuan in the first half of 2025, a year-on-year increase of 0.97%, and a net profit attributable to shareholders of 436 million yuan, up 107.53% year-on-year [1][2]. Financial Performance Summary - Revenue and Profit: The company’s revenue is projected to reach 12.476 billion yuan in 2023, with a growth rate of 10%. By 2027, revenue is expected to grow to 16.091 billion yuan, reflecting a growth rate of 12% [1]. - Net Profit: The net profit attributable to shareholders is forecasted to be 174 million yuan in 2023, with a significant increase to 1.261 billion yuan by 2027, indicating a growth rate of 21.7% [1]. - Earnings Per Share (EPS): The latest diluted EPS is projected to rise from 0.24 yuan in 2023 to 1.71 yuan in 2027 [1]. - Valuation Ratios: The Price-to-Earnings (P/E) ratio is expected to decrease from 186.6 in 2023 to 25.7 in 2027, while the Price-to-Book (P/B) ratio is projected to decline from 13.2 to 6.0 over the same period [1]. Product and Market Analysis - Product Segmentation: In the first half of 2025, the company’s revenue from home decoration wall paint, engineering wall paint, substrates and auxiliary materials, and waterproof rolls were 1.574 billion, 1.795 billion, 1.733 billion, and 460 million yuan respectively, with home decoration wall paint showing a year-on-year increase of 13.45% [1][2]. - Sales Channels: The company’s revenue from distribution and direct sales channels was 5.088 billion and 728 million yuan respectively, with direct sales showing a year-on-year increase of 12.52% [1]. - Geographical Performance: Domestic revenue was 5.681 billion yuan, a year-on-year increase of 0.41%, while international revenue reached 135 million yuan, up 31.07% [1]. Cost and Profitability Analysis - Cost Management: The average procurement prices for home decoration and engineering wall paints decreased by 12.95% and 17.70% respectively, contributing to improved profitability [2]. - Profit Margins: The company’s gross margin and net margin were 32.35% and 7.48% respectively, reflecting an increase of 3.70 and 3.87 percentage points year-on-year [2]. - Cash Flow: The net cash flow from operating activities turned positive at 351 million yuan, primarily due to increased receivables collection [2].