SKSHU(603737) CAITONG SECURITIES·2024-06-14 12:22Investment Rating - The report maintains an "Accumulate" rating for the company [1] Core Views - The company is positioned as a leading domestic paint brand, leveraging dual growth strategies through retail in lower-tier cities and procurement in real estate projects. The market remains fragmented, providing opportunities for the company to increase its market share against foreign competitors [2][3] - The demand for repainting offers stable growth potential, with a shift from real estate to home improvement as the industry matures. The company currently holds a 7% market share in architectural coatings, indicating significant room for growth compared to higher concentration levels in Europe and the US [2][3] - The company is focusing on building brand recognition and expanding its distribution channels, particularly in the "small B + C" segments, which have shown promising revenue growth [2][3] Summary by Sections Company Overview - The company has been deeply rooted in the paint industry for over 20 years, evolving from a retail-focused model to a comprehensive service provider that includes consulting and construction services [8][9] - The ownership structure is stable, with the founder holding a significant stake, which aligns the interests of management and shareholders [13][14] Financial Performance - The company has shown steady revenue growth, with projected net profits for 2024-2026 expected to reach 5.09 billion, 7.09 billion, and 9.36 billion respectively, reflecting growth rates of 139%, 39%, and 32% [3][4] - Revenue for 2023 was reported at 12.476 billion, a 10.03% increase from the previous year, while net profit was 174 million, down 47.33% due to asset impairment provisions [4][16] Market Dynamics - The architectural coatings market is characterized by a shift towards renovation and repainting, driven by a slowdown in new construction and an increase in demand for home improvement [24][30] - The industry is expected to benefit from policy changes that stimulate housing demand, particularly in urban areas where restrictions are being lifted [26][28] Product and Service Strategy - The company is diversifying its product offerings, with wall paints accounting for 60% of revenue, and has expanded into waterproofing and adhesive products [17][18] - The focus on "small B + C" segments has led to a significant increase in the number of distributors, enhancing the company's market reach [2][3]