SKSHU(SH:603737) China Post Securities·2025-10-20 09:34Investment Rating - The investment rating for the company is "Buy" [12] Core Views - The company has shown effective progress in new retail formats, with Q3 profits continuing to improve. For the first three quarters of 2025, the company achieved a revenue of 9.39 billion yuan, a year-on-year increase of 2.7%, and a net profit attributable to shareholders of 740 million yuan, a year-on-year increase of 81.2% [4][6] - The growth is driven by three major retail formats, although there has been a strategic contraction in the waterproof business segment. The revenue from home decoration wall paint, engineering wall paint, substrates and auxiliary materials, and waterproof membranes for the first three quarters were 2.49 billion, 2.90 billion, 2.85 billion, and 720 million yuan, respectively [5] - The company's gross margin has significantly improved, with a gross margin of 32.81% for the first three quarters, an increase of 4.2 percentage points year-on-year. The improvement is attributed to the growth of new retail formats and optimization of channel and product structure [5] Financial Performance - The company reported a strong cash flow performance with operating cash flow of 1.09 billion yuan for the first three quarters, an increase of 170 million yuan year-on-year. Additionally, the company announced a cash dividend of 370 million yuan, with a dividend payout ratio of 50% [6] - Revenue forecasts for 2025 and 2026 are projected at 12.56 billion and 13.26 billion yuan, respectively, with year-on-year growth rates of 3.8% and 5.6%. The net profit attributable to shareholders is expected to be 920 million and 1.10 billion yuan for the same years, reflecting significant growth [6][8]