Investment Rating - The investment rating for the company is "Buy" with a target price of RMB 14.53 [7][9]. Core Views - The company reported a revenue of RMB 2.078 billion for 1H25, a year-on-year decrease of 11.33%, and a net profit attributable to shareholders of RMB 271 million, down 20.25% year-on-year. The second quarter showed a revenue of RMB 1.183 billion, down 12.16% year-on-year but up 32.14% quarter-on-quarter, indicating that revenue and profit met previous expectations [1][2]. - The company is experiencing a slow recovery in pricing, with overall gross margin under pressure. The gross margin for 1H25 was 40.5%, a decrease of 1.61 percentage points year-on-year [2][3]. - The company is maintaining a stable retail brand presence, which is expected to benefit from urban renewal and renovation demand in the second-hand housing market [4]. Summary by Sections Financial Performance - In 1H25, the company's PPR/PE/PVC pipe business generated revenues of RMB 933 million, RMB 411 million, and RMB 290 million, respectively, with year-on-year declines of 13.04%, 13.28%, and 4.21%. The overall revenue decline is attributed to weak retail momentum and increased price competition in the plastic pipe industry [2]. - The net profit margin for 1H25 was 13.04%, down 1.46 percentage points year-on-year, but the decline in net profit margin for 2Q25 showed a narrowing trend [3]. Dividend Policy - The company plans to distribute a cash dividend of RMB 1 per 10 shares (including tax), resulting in a payout ratio of approximately 58% [4]. Profit Forecast and Valuation - The profit forecasts for 2025-2027 have been revised downwards by 20.39%, 15.67%, and 13.81%, respectively, with projected net profits of RMB 857 million, RMB 1.037 billion, and RMB 1.264 billion [5]. - The target price has been adjusted to RMB 14.53, based on a 27x PE valuation for 2025 [5].

Investment Rating - The investment rating for the company is maintained as "Buy" with a target price of HKD 5.89, up from the previous target of HKD 4.36, representing a 35% increase [1][5]. Core Views - The report emphasizes that urban renewal is transitioning from large-scale expansion to improving existing stock, which is expected to catalyze demand for municipal plastic pipes due to infrastructure upgrades [1][2]. - The company is well-positioned to benefit from the growing demand in the agricultural plastic pipe sector, supported by stable growth in primary industry investments and high market share in engineering [1][4]. - The projected total investment in urban gas, water supply, and heating networks over the next five years is approximately CNY 4 trillion, indicating significant market opportunities [3]. Summary by Sections Urban Renewal and Market Potential - The central urban work conference highlighted urban renewal as a key strategy for enhancing quality and efficiency, with a substantial number of existing buildings (3.54 billion) and a total area of 128 billion square meters [2]. - The estimated demand for building renovations is around 2.4 billion square meters, with a stable upward trend expected [3]. Agricultural Investment and Demand Stability - First industry fixed asset investment grew by 6.5% year-on-year in the first half of 2025, indicating robust growth [4]. - The government aims to transform 4.55 million acres of farmland into high-standard farmland by 2035, with increased subsidy standards from CNY 1,300 to CNY 2,400 per acre [4]. Financial Projections and Valuation - The company’s EPS forecasts for 2025-2027 are CNY 0.67, CNY 0.74, and CNY 0.82 respectively, with a projected PE ratio of 8x for 2025 [5][10]. - Revenue is expected to grow from CNY 27,026 million in 2024 to CNY 33,404 million by 2027, reflecting a compound annual growth rate [10][19].