SKSHU(SH:603737) Guotou Securities·2025-10-20 01:40Investment Rating - The investment rating for the company is "Buy-A" with a 12-month target price of 52.8 CNY, compared to the current stock price of 46.28 CNY [4]. Core Insights - The company reported a revenue of 9.39 billion CNY for the first three quarters of 2025, representing a year-over-year increase of 2.69%. The net profit attributable to shareholders was 744 million CNY, showing a significant year-over-year growth of 81.22% [2][3]. - In Q3 2025, the company achieved a revenue of 3.58 billion CNY, which is a 5.62% increase year-over-year, and a net profit of 308 million CNY, reflecting a 53.64% year-over-year growth [1][2]. - The growth in revenue was primarily driven by a rapid increase in the revenue from home decoration wall paint, which reached 2.49 billion CNY, up 11.80% year-over-year [2]. Revenue and Profitability - The company's gross profit margin improved to 32.81% for the first three quarters, an increase of 4.15 percentage points year-over-year. In Q3 alone, the gross margin was 33.57%, up 0.47 percentage points quarter-over-quarter [3]. - The increase in gross margin was attributed to a decline in raw material prices and the strong performance of high-margin retail segments [3]. - The operating cash flow for the first three quarters was 1.088 billion CNY, a year-over-year increase of 18.73%, mainly due to the rapid growth in retail business revenue [3]. Business Segments Performance - The revenue from the home decoration wall paint segment was 2.49 billion CNY, with sales volume and average price increasing by 13.04% and decreasing by 1.18% year-over-year, respectively [2]. - The engineering wall paint segment saw a revenue of 2.90 billion CNY, down 2.51% year-over-year, with sales volume increasing by 4.07% but average price decreasing by 6.41% [2]. - The revenue from auxiliary materials was 2.85 billion CNY, up 11.34% year-over-year, while the average price decreased by 12.69% [2]. - The waterproof membrane segment experienced a significant decline, with revenue of 715 million CNY, down 28.62% year-over-year, due to a decrease in both sales volume and average price [2]. Future Projections - The company is expected to achieve revenues of 12.59 billion CNY, 13.55 billion CNY, and 14.48 billion CNY for 2025, 2026, and 2027, respectively, with year-over-year growth rates of 4.00%, 7.63%, and 6.89% [7]. - The projected net profits for the same years are 919 million CNY, 1.09 billion CNY, and 1.23 billion CNY, with year-over-year growth rates of 176.86%, 18.57%, and 12.66% [7].