SKSHU(SH:603737) Guotou Securities·2024-04-22 04:00Investment Rating - The report maintains a "Buy - A" rating for the company with a 6-month target price of 36.3 CNY, corresponding to a 2024 PE of 30 times [5]. Core Views - The company achieved a steady revenue growth of 10.03% year-on-year in 2023, with total revenue reaching 12.476 billion CNY. However, the net profit declined significantly by 47.33% year-on-year to 174 million CNY due to increased expenses and impairment losses [1][6]. - The first quarter of 2024 showed a revenue of 2.066 billion CNY, a slight increase of 0.62% year-on-year, with net profit rising by 78.20% year-on-year to 47 million CNY, largely due to government subsidies [1][6]. Revenue and Product Performance - In 2023, the company’s revenue from home decoration wall paint was 2.632 billion CNY (up 2.58% year-on-year), while engineering wall paint revenue was 4.676 billion CNY (up 9.52% year-on-year). Adhesives and base materials saw significant growth, with revenues of 761 million CNY (up 29.49%) and 2.424 billion CNY (up 41.02%) respectively [2]. - The company optimized its channel structure, with revenue from distribution models increasing by 18.29% year-on-year to 10.169 billion CNY, while direct sales revenue decreased by 10.87% [2]. Profitability and Cash Flow - The overall gross margin improved to 31.51%, up 2.61 percentage points year-on-year, attributed to lower raw material costs and product mix optimization. The gross margin for home decoration wall paint was 47.69%, while engineering wall paint was 38.12% [3]. - Operating cash flow for 2023 was 1.408 billion CNY, a significant increase of 47.29% year-on-year, primarily due to a shorter collection cycle from distribution business [6]. Future Outlook - The company is expected to achieve revenues of 14.103 billion CNY, 15.990 billion CNY, and 18.150 billion CNY for 2024, 2025, and 2026 respectively, with year-on-year growth rates of 13.04%, 13.39%, and 13.50% [7]. - Net profit forecasts for the same period are 639 million CNY, 795 million CNY, and 998 million CNY, reflecting substantial growth rates of 249.26%, 25.33%, and 27.16% respectively [7].