Shengquan Group(SH:605589) Great Wall Securities·2025-08-27 08:05Investment Rating - The report maintains a "Buy" rating for the company, expecting the stock price to outperform the industry index by more than 15% in the next six months [5][21]. Core Views - The company has shown strong revenue and profit growth in the first half of 2025, driven primarily by increased sales in synthetic resins and advanced electronic materials [2][4]. - The company is positioned well to benefit from the growing demand in AI and new energy sectors, enhancing its future earnings potential [10][12]. - The company emphasizes shareholder returns, planning to distribute a cash dividend of 5.50 yuan per 10 shares, amounting to 4.47 billion yuan, which is 51.54% of the net profit attributable to shareholders [11]. Financial Performance Summary - In the first half of 2025, the company reported revenue of 5.351 billion yuan, a year-on-year increase of 15.67%, and a net profit of 501 million yuan, up 51.19% year-on-year [1][2]. - The overall gross margin for the first half of 2025 was 24.82%, an increase of 1.66 percentage points compared to the same period last year [2]. - The company’s synthetic resin segment generated revenue of 2.81 billion yuan, a 10.35% increase year-on-year, while the advanced electronic materials segment saw revenue of 846 million yuan, up 32.43% year-on-year [4]. Cash Flow and Financial Ratios - The net cash flow from operating activities for the first half of 2025 was -283 million yuan, an increase of 43.94% year-on-year, attributed to increased sales and collections [3]. - The company’s net profit margin improved to 9.75%, up 2.44 percentage points from the previous year [2]. - The company’s return on equity (ROE) is projected to increase from 8.4% in 2023 to 12.2% by 2027 [1][12]. Strategic Direction - The company is focusing on a "dual main business drive + full industry chain synergy" strategy, concentrating on three core areas: chemical new materials, battery energy, and biological manufacturing [10]. - The company is expanding its biomass industry, with significant revenue growth and ongoing projects aimed at enhancing production capacity and product innovation [9][10].