Core Viewpoint - The 2025 China International Roofing and Building Waterproofing Technology Exhibition, themed "Good Waterproof, Good House, Good Future," showcases the comprehensive strength of Dongfang Yuhong, attracting numerous experts and clients for in-depth exchanges [1][3]. Group 1: Exhibition Highlights - Dongfang Yuhong's exhibition design incorporates international styles and brand culture, demonstrating the company's achievements in technological innovation, development layout, and industrial ecology over 30 years [3]. - The exhibition covers the entire industry chain from basic waterproof materials to high-end system solutions, showcasing core product series, classic engineering cases, and overseas market expansion results [3][4]. - The company aims to become the most valuable enterprise in the global building materials industry, driven by technological innovation and global vision [3][9]. Group 2: Product Innovations - Tian Ding Feng, a subsidiary of Dongfang Yuhong, independently showcased its core technologies and customized solutions in the non-woven fabric sector, including a high-strength polypropylene geotextile that has been successfully applied in major projects like Beijing Daxing International Airport [4]. - The exhibition featured a diverse range of roofing solutions, including integrated photovoltaic tiles and various types of roofing materials, attracting global attention [4]. Group 3: Forum Insights - The 2025 International Waterproof High-end Forum emphasized the importance of technological innovation for sustainable development in the waterproofing industry, advocating for collaborative innovation across the entire industry chain [5][7]. - Experts from Dongfang Yuhong shared insights on service standardization and green high-performance waterproof product solutions, highlighting the company's latest breakthroughs in environmentally friendly materials [7]. Group 4: Global Recognition - Dongfang Yuhong's international market integration is a key path for achieving high-quality growth, transitioning from product export to technology export and from single-item output to system services [8]. - The company received multiple awards at the exhibition, including recognition for its innovative products and services, enhancing its global competitiveness [8]. Group 5: Future Vision - Dongfang Yuhong is committed to creating a lasting safe environment for humanity and society, driving development through innovation and building a safe barrier for a better life in collaboration with global partners [9].

Core Viewpoint - The company reported a decline in revenue and net profit for the first three quarters of 2025, with revenue at 4.7 billion yuan, down 8.4% year-on-year, and net profit at 20 million yuan, down 84.1% year-on-year [1] Group 1: Financial Performance - Revenue for the third quarter was 1.48 billion yuan, a decrease of 10.9% compared to the same period last year, with a net profit of -30 million yuan, down from 30 million yuan in the previous year [1] - The decline in revenue is attributed to a reduction in domestic engineering construction projects and slower project progress, leading to decreased demand in the waterproof market [2] - The net profit decline exceeded the revenue decline due to increased credit impairment provisions and reduced other income and non-operating income [2] Group 2: Margin and Cost Management - The gross profit margin improved to 24.3% in the first three quarters, up from 23.0% in the same period last year, driven by an optimized revenue structure and growth in high-margin overseas and retail businesses [2] - The company has reduced financial expenses from 70 million yuan in the previous year to 40 million yuan, and sales expenses also saw a slight decline [2] Group 3: Cash Flow and Receivables - Operating cash flow showed significant improvement, with a net cash flow from operating activities of -820 million yuan, better than -1.5 billion yuan in the previous year, due to enhanced collection of receivables and optimized supplier payment methods [2] - Accounts receivable at the end of the period stood at 4.07 billion yuan, down from 4.73 billion yuan in the previous year [2] Group 4: Investment Outlook - The company has adjusted its profit forecasts for 2025-2027, expecting net profits of 50 million yuan, 230 million yuan, and 370 million yuan respectively, down from previous estimates [3] - Despite the downward revision, macro-level support policies for real estate and infrastructure are expected to boost industry confidence, and the waterproof industry is closely linked to new real estate projects [3] - As a leading player in the waterproof sector, the company maintains advantages in brand, channel, and customer resources, and is expected to stabilize its scale during the industry downturn [3]

Investment Rating - The investment rating for the company is "Accumulate" (maintained) [2] Core Views - The company has experienced a decline in revenue and net profit due to continued weak downstream demand and tightened credit policies. The gross margin has improved slightly due to stable raw material prices and ongoing optimization of product and channel structures [7] - The company has proactively adjusted product prices in response to market conditions, indicating a potential recovery in profitability as the competitive landscape improves. This includes price increases of 3%-13% for certain waterproof coatings and 3%-7% for waterproof membranes [7] - The forecast for net profit from 2025 to 2027 shows a recovery trend, with expected net profits of 0.42 million, 1.28 million, and 2.09 million respectively, reflecting growth rates of -5.81%, 207.23%, and 64.19% [7] Financial Performance Summary - For the first three quarters of 2025, the company reported a revenue of 4.703 billion, a decrease of 8.43% year-on-year, and a net profit of 0.20 billion, down 84.08% year-on-year. The Q3 revenue was 1.483 billion, down 10.93% year-on-year, with a net profit of -0.27 billion [7] - The company's gross margin for Q3 was 23.56%, an increase of 1.38 percentage points year-on-year, while the operating cash flow showed a net outflow of 0.824 billion, which improved by 0.680 billion year-on-year [7][8] - The financial forecasts indicate a revenue decline in 2024 and 2025, with expected revenues of 6.829 billion and 6.327 billion respectively, followed by a recovery in 2026 and 2027 [6][8]

Investment Rating - The investment rating for the company is "Accumulate" (maintained) [2] Core Views - The company is experiencing revenue pressure due to a contraction in demand, with a proactive tightening of engineering business operations. The revenue for 1H2025 was 3.22 billion yuan, a year-on-year decrease of 7.23%, and the net profit attributable to shareholders was 47 million yuan, down 49.98% [7][9] - The overall gross margin improved to 24.68%, an increase of 1.23 percentage points, attributed to the company's focus on high-end markets and premium projects, as well as a 2.18% decrease in raw material costs [7][9] - The company has announced price increases for certain waterproofing products, which is seen as a response to raw material pressures and a move to combat low-price competition in the industry [9] Financial Performance Summary - Revenue forecast for 2025 is 6.48 billion yuan, with a projected decline of 5.17% year-on-year, followed by a recovery in 2026 and 2027 with growth rates of 10.34% and 10.39% respectively [6][10] - The net profit attributable to shareholders is expected to be 93 million yuan in 2025, with significant growth projected in the following years, reaching 264 million yuan by 2027 [6][10] - Earnings per share (EPS) is forecasted to be 0.08 yuan in 2025, increasing to 0.24 yuan by 2027, with corresponding price-to-earnings (PE) ratios of 63.18x, 32.18x, and 22.35x for the next three years [6][10] Market Performance - The company's stock has shown a performance of -4% over the last 12 months, compared to a 10% increase in the market benchmark [4]

Summary of Conference Call on Waterproof Industry Price Increase Industry Overview - The waterproof industry is experiencing a significant price increase due to a challenging market environment in 2024, primarily influenced by a downturn in the real estate sector and a subsequent decline in demand for renovation and construction materials [1][2][4]. Key Points and Arguments - **Price War Impact**: In 2024, the industry faced a price war that led to three rounds of price reductions (15%-20%), which did not improve sales or market share but diluted profits [1][2]. - **Price Increase Implementation**: Starting mid-June 2025, companies began to implement price increases across various product categories: waterproof materials (3%-8%), mortar products (5%-7%), and sealants (8%-10%), with an overall increase of approximately 6%-7% [1][2]. - **Sales and Profit Goals**: The price increase aims to improve unsatisfactory sales progress and profit margins from the first half of 2025. Companies hope to encourage distributors to increase inventory and meet sales targets [1][2][7]. - **Market Stability and Volatility**: Current market prices are relatively stable, but fluctuations may occur during late July to early August when distributors purchase in bulk, making this a critical period for assessing the effectiveness of the price increase [1][8]. - **Profit Margin Expectations**: If the price increase is successful, company-level profits are expected to rise by 4-5 percentage points. Some companies are also reducing costs through layoffs and cutting unnecessary expenses [1][10]. - **Distributor Contract Adjustments**: Major companies are adjusting distributor contracts to lower sales targets, helping distributors maintain profit margins amid market challenges [1][11]. Additional Important Insights - **Regional Demand Decline**: The Southwest region has seen a more than 30% reduction in demand for construction materials since 2023, with new projects decreasing significantly [2][16]. - **Market Share Variability**: Companies like Dekor and Rain Rainbow have varying market shares in the Southwest, with Dekor holding about 12%-13% and Rain Rainbow around 10% [22]. - **Future Trends**: The trend of rural self-built housing is expected to continue, particularly in regions like Yunnan and Guizhou, driven by local cultural factors and government policies [20][21]. - **Profitability Focus Shift**: There is a potential shift in performance evaluation from sales volume to profit margins, which may lead to changes in operational strategies, including cost-cutting measures [29][30]. This summary encapsulates the key discussions and insights from the conference call regarding the waterproof industry's current state and future outlook.

Core Viewpoint - The company, Oriental Yuhong, has been actively addressing the leakage issues in the construction sector through its public welfare initiative "Serving the Public, Rejecting Leakage," which has evolved over nearly two decades to provide comprehensive solutions and services [1][3][4] Group 1: Company Initiatives - Oriental Yuhong has organized the "Serving the Public, Rejecting Leakage" initiative since 2006, focusing on public education and providing professional waterproofing services [1][3] - The initiative has expanded from single-point repair services to nationwide coverage, integrating digital services and diverse solutions [1][4] - The company offers free leakage inspection services and emphasizes the importance of waterproofing repairs to residents [3] Group 2: Community Impact - The initiative has reached over a thousand communities across the country, providing free leakage consultations to nearly 140,000 individuals and free repair services to around 600 special households [3] - The company pays special attention to vulnerable groups, including economically disadvantaged families, disabled individuals, and elderly residents living alone [3] - The initiative has received significant media attention, highlighting Oriental Yuhong's commitment to social responsibility [3] Group 3: Future Plans - The 2025 "Serving the Public, Rejecting Leakage" initiative has been launched in multiple provinces and cities, including Beijing, Shanghai, Sichuan, Guizhou, Jiangxi, and Fujian [4] - Oriental Yuhong aims to continue leveraging product technology and professional services to further address leakage issues and enhance living environments for families [4] - The company is committed to its mission of creating a lasting and safe environment for society [4]

Core Insights - Brand Finance released the "2025 China Brand Value Top 500" list, showing that the total brand value of Chinese brands exceeded $2 trillion, marking a 3% year-on-year growth, indicating strong global competitiveness [1] - Oriental Yuhong, the largest waterproof system service provider in Asia, made its debut on the list at rank 412, being the only brand from the waterproof industry to be included [1][2] Brand Value and Strength - The report evaluates brand value based on financial performance, market influence, and consumer loyalty, highlighting the development trends and market changes of Chinese brands over the past year [2] - Oriental Yuhong's inclusion in the list reflects its effective brand building and sustainable development [3] Company Performance - Oriental Yuhong has experienced significant growth, with revenue increasing from 710 million yuan in 2008 to 28.1 billion yuan in 2024, representing a nearly 39-fold increase and a compound annual growth rate of approximately 30% over 16 years [4] Business Diversification - The company has diversified its operations beyond waterproofing to include various segments such as construction waterproofing, building materials, and energy-saving insulation, establishing over 70 production and R&D bases domestically and internationally [5] Market Position - Oriental Yuhong has been recognized in multiple prestigious rankings, including Forbes Global 2000 and Hu Run's Top 100 Chinese Companies, reflecting its growing market position and comprehensive strength [6] Innovation and R&D - The company emphasizes research and development, with a focus on product quality and innovation, having established a global leading R&D system and invested 586 million yuan in R&D in 2024 [13][11] Sustainability Efforts - Oriental Yuhong is committed to sustainable development, having received multiple certifications for green products and factories, and actively engaging in projects that promote environmental responsibility [15][17] Social Responsibility - The company invests in improving the living conditions of its workers and provides educational support for workers' children, demonstrating its commitment to social responsibility [18]

Investment Rating - The investment rating for the company is "Recommended" [1][10] Core Views - The company has shown continuous improvement in gross margin and is actively engaging in dividend distribution and share buybacks to reward the market [1][10] - The company reported a revenue of 6.83 billion yuan in 2024, a year-on-year decrease of 14.0%, but managed to turn a profit with a net profit of 0.4 billion yuan [5][10] - The gross margin improved by 0.6 percentage points to 21.8% in 2024, attributed to stable sales prices and reduced operating costs through technological innovation [8][10] Summary by Sections Financial Performance - In 2024, the company achieved a revenue of 68.3 billion yuan, down 14.0% year-on-year, while the net profit was 0.4 billion yuan, marking a turnaround from losses [5][10] - The fourth quarter of 2024 saw a revenue decline of 0.6% to 16.9 billion yuan, with a net profit of -0.8 billion yuan [5] - For Q1 2025, revenue decreased by 6.1% to 14.0 billion yuan, and net profit fell by 23.2% to 0.4 billion yuan [5] Margin and Cost Management - The gross margin for 2024 was 21.8%, an increase of 0.6 percentage points, due to stable sales prices and reduced costs [8][10] - The company has focused on transforming retail channels and expanding engineering channels amidst a declining demand in the waterproofing industry [8][10] Cash Flow and Shareholder Returns - The company generated a net cash flow from operating activities of 3.2 billion yuan in 2024, an increase from 1.9 billion yuan in the previous year [9] - A total of 7.8 billion yuan is planned for dividends and share buybacks in 2024, with a cash dividend of 3 yuan per 10 shares [9][10] Future Outlook - The company is expected to see a recovery in net profit, with projections of 2.0 billion yuan in 2025 and 3.3 billion yuan in 2026 [10] - The gross margin is anticipated to improve further, supported by a decline in raw material costs due to falling oil prices [8][10]

Investment Rating - The investment rating for the company is "Buy" and is maintained [7]. Core Views - The company is expected to achieve a revenue of 6.8 billion yuan in 2024, a year-on-year decline of 14%, while the net profit attributable to shareholders is projected to be approximately 44 million yuan, a year-on-year increase of 113%. However, the non-recurring net profit is expected to be around -250 million yuan [2][4]. - In the first quarter, the company achieved a revenue of 1.4 billion yuan, a year-on-year decline of 6%, with a net profit of 40 million yuan, down 23% year-on-year, and a non-recurring net profit of approximately 20 million yuan, a decline of 4% year-on-year [2][4]. - The waterproof materials industry is under significant pressure in 2024, with a total production of waterproof materials in China expected to decline by 17% year-on-year [11]. Summary by Sections Revenue and Profitability - The company's revenue is expected to decline by 14% in 2024, with the main business revenue decreasing by 12%. Specifically, the revenue from waterproof membranes is expected to drop by 15%, waterproof coatings by 6%, and engineering construction by 17% [11]. - The gross profit margin for 2024 is projected to be around 21.8%, an increase of 0.6 percentage points year-on-year, primarily due to stable sales prices and reduced unit costs [11]. - The first quarter gross profit margin improved to approximately 24.4%, reflecting a significant improvement compared to the previous year [11]. Cash Flow and Financial Health - The company's operating cash flow has shown gradual improvement, with a cash collection ratio of 1.08 in the past three years. The net cash flow from operating activities for 2024 is expected to be 320 million yuan [11]. - The company has delayed some fundraising projects, with 8 billion yuan of the raised funds already utilized as of 2024 [11]. Future Outlook - The company is expected to achieve net profits of approximately 330 million yuan and 500 million yuan in 2025 and 2026, respectively, corresponding to valuation multiples of 16 and 11 times [11].