WEIXING NBM(SZ:002372) HTSC·2025-10-28 03:44Investment Rating - The investment rating for the company is maintained as "Buy" with a target price of RMB 14.34 [1][5] Core Insights - The company's Q3 revenue was RMB 1.289 billion, a year-on-year decrease of 9.83% but a quarter-on-quarter increase of 8.99%. The net profit attributable to the parent company was RMB 269 million, down 5.48% year-on-year but up 70.68% quarter-on-quarter, aligning with previous expectations [1] - The overall gross margin for the first nine months of 2025 was 41.47%, a decrease of 1.02 percentage points year-on-year. However, the gross margin for Q3 improved to 43.04%, reflecting a quarter-on-quarter increase of 2.5 percentage points, attributed to stabilizing retail demand and ongoing product price adjustments [2] - The company reported a net profit margin of 16.03% for the first nine months of 2025, with a significant increase in investment income in Q3, primarily due to fair value changes in financial assets held by a subsidiary [3] - The government plans to accelerate underground pipeline renovations, which is expected to boost demand for plastic pipes and stabilize sales for the company [4] Summary by Sections Financial Performance - Q3 revenue was RMB 1.289 billion, with a year-on-year decline of 9.83% and a quarter-on-quarter increase of 8.99%. Cumulative revenue for the first three quarters of 2025 was RMB 3.367 billion, down 10.76% year-on-year [1] - The gross margin for Q3 was 43.04%, showing a quarter-on-quarter improvement of 2.5 percentage points, while the gross margin for the first nine months was 41.47%, down 1.02 percentage points year-on-year [2] - The net profit attributable to the parent company for the first nine months was RMB 540 million, down 13.52% year-on-year, with a net profit margin of 16.03% [3] Market Outlook - The government aims to renovate 700,000 kilometers of underground pipelines during the 14th Five-Year Plan, with an investment exceeding RMB 5 trillion, which is expected to positively impact the demand for plastic pipes [4] - The retail pipeline demand is anticipated to gradually stabilize, driven by the ongoing recovery in the second-hand housing market [4] Valuation and Forecast - The company’s net profit forecasts for 2025-2027 are RMB 857 million, RMB 1.037 billion, and RMB 1.264 billion, respectively, with corresponding EPS of RMB 0.54, RMB 0.65, and RMB 0.79 [5] - The target price is set at RMB 14.34, based on a 22x PE valuation for 2026 [5]