SKSHU(SH:603737) Guoxin Securities·2025-08-27 02:57Investment Rating - The report maintains an "Outperform the Market" rating for the company [4][6][42] Core Views - The company demonstrates resilient revenue growth with a 0.97% year-on-year increase in revenue for H1 2025, reaching 5.82 billion yuan, while net profit surged by 107.5% to 440 million yuan [1][9] - The retail transformation is gaining momentum, with both volume and price increases in home decoration paints, indicating a successful channel upgrade [2][12] - The gross margin continues to improve, reaching 32.4% in H1 2025, up 3.7 percentage points year-on-year, driven by a higher proportion of C-end sales and price increases [3][34] - Operating cash flow turned positive and significantly improved, with a net cash flow of 350 million yuan in H1 2025, reflecting a healthier financial structure [3][38] Summary by Sections Financial Performance - In H1 2025, the company achieved a revenue of 5.82 billion yuan, with a net profit of 440 million yuan, and a non-recurring net profit of 290 million yuan, marking increases of 107.5% and 268.5% respectively [1][9] - The second quarter saw a slight revenue decline of 0.2% year-on-year, but net profit still grew by 103% [1][9] Product Segmentation - Home decoration wall paint revenue increased by 8.4% to 1.57 billion yuan, while engineering wall paint revenue decreased by 2.3% to 1.79 billion yuan [2][12] - The company is focusing on high-end product matrices and successfully replicating new retail models [2][15] Margin and Cost Management - The comprehensive gross margin improved to 32.4%, with a reduction in expense ratios across various categories, including sales and management [3][34] - The operating cash flow for H1 2025 was 350 million yuan, showing a significant improvement from the previous year [3][38] Future Outlook - The company is expected to continue its growth trajectory, with projected EPS of 1.63, 2.08, and 2.74 yuan for 2025, 2026, and 2027 respectively, indicating a strong potential for future profitability [4][42]