MILKYWAY(SH:603713) HTSC·2025-10-30 06:45Investment Rating - The investment rating for the company is maintained as "Buy" with a target price of RMB 80.64 [1][5]. Core Views - The company reported a steady performance in Q3 2025, achieving revenue of RMB 3.635 billion, a year-on-year increase of 2.10%, but a quarter-on-quarter decrease of 1.57%. The net profit attributable to shareholders was RMB 173 million, down 3.51% year-on-year and 3.67% quarter-on-quarter, slightly below expectations [1][2]. - The company has shown resilience despite weak upstream industry demand, leveraging its diversified business layout and strong management capabilities to deliver relatively stable results [2]. - The new integrated hazardous chemicals base in Fangchenggang has commenced operations, enhancing the company's logistics capabilities and supporting its "Belt and Road" initiative [4]. Summary by Sections Financial Performance - In the first three quarters, the company achieved revenue of RMB 10.670 billion, a year-on-year increase of 11.70%, and a net profit of RMB 525 million, up 7.04% year-on-year. The net profit was impacted by weak chemical demand and revenue recognition timing issues [1][2][3]. - The gross profit for the first nine months was RMB 1.21 billion, with a gross margin of 11.4%, reflecting a slight year-on-year increase [3]. Industry Context - The upstream industry remains weak, with the chemical raw materials and products manufacturing PPI showing a decline. Despite this, the company managed to achieve a slight revenue growth [2]. - The report anticipates that the "anti-involution" trend will drive capacity optimization in the chemical industry, potentially improving industry conditions in the medium to long term [1][5]. Future Outlook - The company has adjusted its net profit forecasts for 2025-2027 downwards by 2.28%, 6.42%, and 12.76% respectively, but still expects a compound annual growth rate of 13.41% over the three years [5]. - The target price has been revised from RMB 69.8 to RMB 80.64, based on a PE ratio of 17.3x for 2026 [5].