SKSHU(SH:603737) Tianfeng Securities·2024-04-22 01:30Investment Rating - The report maintains a "Buy" rating for the company, indicating a positive outlook for the stock over the next six months [4][6][18]. Core Views - The company is expected to benefit from the gradual release of existing demand, which will boost consumer (C-end) paint demand. The company has significant advantages in C-end branding and channels, which are likely to sustain good growth. Additionally, adjustments in the B-end structure are anticipated to mitigate the impact of new housing declines [4][6]. Financial Performance Summary - In 2023, the company achieved a net profit attributable to shareholders of 173.54 million yuan, a decrease of 47.33% year-on-year. Revenue for the same year was 12,475.68 million yuan, reflecting a growth of 10.03% year-on-year [5][12]. - The company's gross margin improved to 31.51% in 2023, up by 2.61 percentage points year-on-year. The gross margins for home decoration paint, engineering paint, and waterproof materials were 47.69%, 38.12%, and 15.25%, respectively [3][12]. - Operating cash flow for 2023 was a net inflow of 1,408.06 million yuan, an increase of 4.52 million yuan year-on-year, primarily due to an improvement in cash collection [3][13]. Revenue and Profit Forecast - The company’s revenue is projected to grow to 14,927.42 million yuan in 2024, representing a growth rate of 19.65%. The net profit attributable to shareholders is expected to rebound to 700.43 million yuan in 2024, reflecting a growth rate of 303.61% [5][12][14]. - The report has adjusted the profit forecasts for 2024 and 2025 to 700.43 million yuan and 1,172.80 million yuan, respectively, while introducing a new forecast for 2026 at 1,344.20 million yuan [4][5]. Market Position and Strategy - The company continues to optimize its channel structure, focusing on high-end retail transformation and expanding its customer base in the small business (B-end) sector. The C-end wall paint revenue accounted for 36% of total revenue in 2023, indicating a strong market presence [2][4]. - The company is diversifying its product offerings, with significant growth in waterproof materials and base materials, achieving revenues of 1,260 million yuan and 2,420 million yuan, respectively, in 2023 [2][4].