Investment Rating - The investment rating for the company is "Buy" [10] Core Insights - The company has maintained stable growth and excellent profitability over the long term, but faced a temporary decline in revenue and profitability due to the downward pressure from the real estate cycle starting in 2022. The operational pressure is viewed as a short-term fluctuation rather than a long-term change, with significant competitive advantages remaining. The expansion into a whole-house water system is expected to open up long-term growth opportunities [3][20]. Summary by Sections Comparison with Geberit - The company is compared to Geberit due to similarities in business areas, focusing on bathroom technology and building drainage systems. Geberit has shown long-term stable performance with a compound annual growth rate (CAGR) of approximately 6% from 1997 to 2024, with a net profit margin consistently around 20% [6][22]. - Geberit's success is attributed to stable governance, a long-term strategy, continuous innovation, and systematic service approaches [6][37]. Current Situation and Future Potential - The company’s PPR pipe revenue has declined primarily due to a decrease in industry demand, yet its market share has increased to nearly 20%. This indicates a strong business model and brand advantage despite market pressures [6][67]. - The whole-house water system launched in August 2025 is expected to significantly increase the average customer value per household, potentially reaching around 10,000 yuan per household [7][8]. - Recent acquisitions have enhanced the company's system integration capabilities, similar to Geberit's strategy, with notable acquisitions in 2022 and 2023 to strengthen its design and integration capabilities [7][8]. Brand and Service Enhancements - The company has upgraded its brand image and service capabilities, including signing a celebrity endorsement and establishing regional service subsidiaries to enhance service delivery [8][8]. - The company’s competitive advantage remains strong, with a clear long-term strategy and a focus on high-end branding, service, and value [8][71]. Financial Projections - The projected net profits for 2025 and 2026 are approximately 930 million yuan and 970 million yuan, respectively, corresponding to price-to-earnings (PE) ratios of about 18 and 17 times [8].

Group 1: Financial Performance - In Q1 2025, the company's revenue was 900 million yuan, a year-over-year decrease of 10.2% and a quarter-over-quarter decrease of 64.1% [1] - The net profit attributable to the parent company was 110 million yuan, down 25.95% year-over-year and 65.42% quarter-over-quarter [1] - The company's gross profit margin in Q1 was 40.45%, a decrease of 1.03 percentage points year-over-year, while the net profit margin was 12.95%, down 2.82 percentage points year-over-year [1] Group 2: Market Conditions - The market demand remains weak, with a reported 14.3% year-over-year decline in housing completion area according to the National Bureau of Statistics [1] - The company's terminal retail pipe sales continue to be under pressure due to the overall market conditions [1] Group 3: Strategic Focus and Brand Development - The company is focusing on its core pipeline business while expanding into waterproofing and water purification, gradually building a comprehensive water system product line [2] - The company aims to enhance its brand image by hiring Liu Shishi as the spokesperson for its water ecology brand and launching the "Elephant Weisen" visual identity [2] Group 4: Dividend Policy and Shareholder Returns - The company plans to distribute a cash dividend of 5 yuan per 10 shares in 2024, totaling 786 million yuan, along with an interim dividend of 1 yuan per 10 shares, totaling 157 million yuan [2] - Cumulatively, the company will distribute 943 million yuan in dividends in 2024, representing 99% of its net profit attributable to the parent company, with a current dividend yield of approximately 4.8% [2] Group 5: Investment Outlook - The company is expected to achieve net profits attributable to the parent company of 1.2 billion yuan, 1.43 billion yuan, and 1.55 billion yuan for the years 2025 to 2027, corresponding to price-to-earnings ratios of 16, 14, and 13 times [3] - The company maintains a strong operational foundation through continuous investment in brand and channel development, which is expected to help it accumulate strength in a challenging environment [3]