SKSHU(SH:603737) Changjiang Securities·2025-10-20 15:23Investment Rating - The investment rating for the company is "Buy" and is maintained [5]. Core Views - The company achieved a revenue of 9.4 billion yuan in the first three quarters of 2025, representing a year-on-year growth of 3%. The net profit attributable to shareholders was 740 million yuan, up 81% year-on-year, while the net profit excluding non-recurring items reached 560 million yuan, marking a 126% increase [3][4]. - In the third quarter, the company reported a revenue of 3.6 billion yuan, a 6% increase year-on-year, with a net profit of 310 million yuan, up 54% year-on-year, and a net profit excluding non-recurring items of approximately 270 million yuan, reflecting a 60% increase [3][4]. Summary by Sections Revenue and Profitability - The company's main business, wall coatings, saw a revenue of approximately 5.4 billion yuan in the first three quarters, growing by 4% year-on-year. The revenue from home decoration wall coatings was 2.49 billion yuan, up 12% year-on-year, while the average price decreased by 1% to 5.9 yuan/kg. The revenue from engineering wall coatings was 2.9 billion yuan, down 3% year-on-year, despite a 4% increase in sales volume [8]. - The revenue from auxiliary materials was about 2.85 billion yuan, an 11% increase, benefiting from the high growth of new business models. However, the revenue from waterproof membranes was approximately 720 million yuan, down 29% year-on-year, indicating a decline in competitive advantage in this segment [8]. Margin and Cost Management - The gross margin for the first three quarters was approximately 32.8%, an increase of 4.2 percentage points year-on-year, with the third quarter gross margin reaching 33.6%. This improvement is attributed to optimized channel and product structures, as well as a decrease in raw material prices [8]. - The company maintained a high net profit margin, with the net profit margin for the first half of the year at 7.9% and reaching 8.6% in the third quarter. If asset and credit impairment losses of 80 million yuan are excluded, the operating net profit margin would be approximately 10.6% [8]. Cash Flow and Receivables - The accounts receivable and notes at the end of the third quarter were approximately 3.45 billion yuan, significantly down from 4.29 billion yuan in the same period last year, reflecting improved channel structure and risk management [8]. - The cash collection ratio for the first three quarters was about 1.10, an improvement from 1.04 in the same period last year, while the cash payment ratio was about 1.07, up from 0.93 year-on-year. The net cash flow from operating activities reached approximately 1.09 billion yuan, the best historical level for the same period [8]. Future Outlook - The company is recommended as a leading player in the consumer building materials sector, with both revenue and operating net profit reaching new highs. The growth is driven by strategic initiatives that adapt to new market demands, such as the "Beautiful Countryside" and "Immediate Living & Artistic Paint" models. The increasing proportion of renovation in downstream activities is expected to accelerate the expansion of its coating brand model [8].