SKSHU(SH:603737) Dongguan Securities·2025-09-01 12:32Investment Rating - The report maintains an "Accumulate" rating for the company, SanKeTree (603737) [2][4]. Core Views - The company achieved significant growth in performance due to channel structure adjustments and a focus on retail, with a notable increase in net profit and earnings per share [2][3]. - The company is actively expanding its customer base and optimizing channel structures, targeting high-quality sectors such as central and state-owned enterprises, urban construction, and industrial plants [3][4]. Summary by Relevant Sections Financial Performance - In the first half of 2025, the company reported revenue of 5.816 billion yuan, a year-on-year increase of 0.97%. Net profit attributable to shareholders reached 436 million yuan, up 107.53% year-on-year, with basic earnings per share of 0.59 yuan, a 103.45% increase [3]. - The second quarter saw revenue of 3.686 billion yuan, a slight decrease of 0.24% year-on-year, while net profit attributable to shareholders was 331 million yuan, an increase of 102.97% [3]. Business Segments - The company's business segments showed varied performance: - Engineering wall paint generated revenue of 1.795 billion yuan, down 2.26% year-on-year, with a gross margin of 35.42% [3]. - Base and auxiliary materials revenue was 1.733 billion yuan, up 52.79% year-on-year, with a gross margin of 20.62% [3]. - Home decoration wall paint revenue reached 1.574 billion yuan, an increase of 8.43% year-on-year, with a gross margin of 49.41% [3]. Profitability and Cost Management - The overall gross margin for the first half was 32.35%, up 3.70 percentage points year-on-year, with a net profit margin of 7.49%, an increase of 3.85 percentage points [3]. - The company effectively managed expenses, with total expense ratio decreasing by 1.57 percentage points to 23.67% [3]. Cash Flow and Asset Management - The company improved its asset structure, with a debt-to-asset ratio of 76.45%, down 4.45 percentage points year-on-year. Accounts receivable decreased by 15.17% to 3.577 billion yuan, indicating enhanced management capabilities [3]. - Operating cash flow showed a net inflow of 351 million yuan, an increase of 393 million yuan year-on-year [3]. Future Outlook - The company is expected to continue its growth trajectory, with projected earnings per share of 1.04 yuan and 1.37 yuan for 2025 and 2026, respectively, corresponding to price-to-earnings ratios of 47 times and 35 times [4].