Summary of the Conference Call for Rabbit Baby (兔宝宝) Company Overview - **Company**: Rabbit Baby (兔宝宝) - **Industry**: Wood-based panel and home furnishing industry Key Points Financial Performance - In the first three quarters of 2025, Rabbit Baby's overall performance remained stable despite a decline in panel business revenue. The sales volume of particleboard significantly increased to nearly 11 million sheets, with an expected annual total of 15-16 million sheets [2][4][5] - Revenue from auxiliary materials, such as edge banding strips, grew by 28.7% to 270 million yuan, while other decorative materials increased by 12.3% to 1.74 billion yuan [2][4] - The home furnishing segment saw a nearly 10% growth, with full-house customization products increasing by 5.5%, and significant growth in flooring brand usage fees (up 181%) and A-class wooden doors (up 80%) [2][4] Challenges Faced by Qingdao Yufeng - Qingdao Yufeng faced significant operational pressure, with a 61.2% year-on-year revenue decline to 102 million yuan and a net loss exceeding 100 million yuan. The company is expected to see a 50%-60% drop in annual sales [2][6] Market Trends and Product Strategy - The demand for particleboard is rapidly increasing, particularly in the full-house customization sector. Rabbit Baby launched the Cool Baby Financial Edition and Pure Core Edition series, achieving 2-3 times growth in regions like Hebei, Shanxi, and Inner Mongolia [2][9] - The company plans to increase particleboard sales to over 20 million sheets by 2026 and 30 million sheets by 2027, while multi-layer and ecological boards are expected to face varying degrees of decline [2][10] Supply Chain and Production Adjustments - Rabbit Baby is focusing on optimizing its product system and enhancing quality standards in response to challenges in raw materials and production equipment upgrades. The company has implemented strict controls on the supply chain, particularly for substrates and paper [3][15] - The particleboard market currently experiences oversupply, with actual demand around 40-45 million cubic meters against a production capacity of nearly 70 million cubic meters. The company is adopting a centralized procurement model rather than building its own factories [17][18] Competitive Landscape - Particleboard is increasingly used in full-house customization, especially in northern markets, where consumer preferences are shifting towards environmental performance and design aesthetics. Rabbit Baby aims to enhance its competitiveness by offering a range of products that meet diverse consumer needs [19] Auxiliary Materials Growth Potential - The growth of auxiliary materials, such as edge banding strips, is significant, with a current usage rate of 11-12%. The company aims to increase this to 16% [25][28] - The overall performance of auxiliary materials is expected to improve, with a focus on promoting hardware products, although their profit margins are relatively low (15%-20%) [25] Future Outlook - The company anticipates that the particleboard sales will reach approximately 15 million sheets in 2025, with a target of over 20 million sheets in 2026. Multi-layer and ecological boards are expected to decline by single-digit percentages and over 10%, respectively [10][29] Conclusion - Rabbit Baby is navigating a challenging market environment with strategic adjustments in product offerings, supply chain management, and a focus on enhancing quality and competitiveness in the particleboard sector. The company is well-positioned to capitalize on the growing demand for customized home furnishing solutions while addressing the challenges faced by its subsidiary, Qingdao Yufeng.

Financial Performance - In the first three quarters of 2025, the company achieved revenue of 6.319 billion yuan, a decrease of 2.25% year-on-year [2] - Net profit attributable to shareholders was 629 million yuan, an increase of 30.44% year-on-year [2] - Excluding the impact of Qingdao Yufeng Hantang's goodwill impairment, the main business achieved revenue of 6.217 billion yuan, a growth of 0.24% [2] Quarterly Results - In Q3 2025, the company reported revenue of 2.684 billion yuan, an increase of 5.03% year-on-year [3] - Net profit for Q3 was 361 million yuan, a significant increase of 51.67% year-on-year [3] - The main business in Q3 achieved revenue of 2.636 billion yuan, up 8.55% year-on-year [3] Business Segment Performance - The decorative materials segment generated revenue of 5.253 billion yuan in the first three quarters, down 2.10% year-on-year [4] - Custom home business revenue was 1.011 billion yuan, a decrease of 3.39% [4] - In Q3, the decorative materials segment revenue was 2.268 billion yuan, an increase of 8.84% [4] Growth Drivers - The company has seen rapid growth in other decorative materials, with edge banding sales up 28.7% year-on-year [5] - The sales of decorative paper reached 960 million yuan, a growth of 12.34% [5] Investment and Goodwill - The company holds shares in Hanhai Group valued at 600 million yuan, with a total of 7.3891 million shares [6] - As of Q3, goodwill amounted to 530 million yuan, with a 100 million yuan impairment loss recognized for Qingdao Yufeng Hantang [9] Dividend Policy - The company plans to distribute at least 50% of its distributable profits as cash dividends annually over the next three years [10]

Core Insights - The report maintains a positive outlook on the building materials sector, emphasizing the potential for recovery in consumer building materials and cement industries [1][4] - The performance of consumer building materials has shown significant differentiation, with companies like Sanke Tree demonstrating strong alpha, while the overall market remains under pressure due to real estate challenges [6][7] - The cement industry has experienced a notable decline in costs, leading to a counterintuitive increase in net profits despite lower production levels [6][8] Consumer Building Materials - In H1 2025, the performance of consumer building materials was mixed, with Sanke Tree outperforming its peers due to an optimized competitive landscape and strong brand effects [6][7] - The real estate sector remains under pressure, with a reported decline in construction and sales areas of 16.5% and 4.0% year-on-year respectively [6][7] - Sanke Tree's gross margin improved significantly, with increases of 2.7 and 4.3 percentage points in Q1 and Q2, attributed to high-margin products and enhanced service quality [6][7] - Other companies like Rabbit Baby also saw stable performance due to product structure optimization, while competition in waterproofing and piping remains intense [6][7] Cement Industry - The cement sector faced a "strong then weak" trend in H1 2025, with production down 4.3%, marking the lowest level since 2010 [6][8] - Despite revenue declines for major players like Conch Cement and Huaxin Cement, gross margins improved due to falling coal prices, resulting in profit growth for these companies [6][8] - The average price per ton for major cement companies increased year-on-year, with Conch Cement and Huaxin Cement seeing price rises of 5.6 and 25.7 respectively [6][8] - Starting in August, some regions began to raise prices, indicating potential improvements in supply-demand dynamics for the second half of the year [8]

Financial Performance - In H1 2025, the company achieved revenue of CNY 3.634 billion, a decrease of 7.01% year-on-year; net profit attributable to shareholders was CNY 268 million, an increase of 9.71% [1] - Excluding Qingdao Yufeng Hantang, the main business achieved revenue of CNY 3.581 billion, a decrease of 5.11%, and net profit of CNY 343 million, an increase of 10.28% [2] - In Q2 2025, revenue was CNY 2.363 billion, a decrease of 2.55%, with net profit of CNY 167 million, an increase of 7.15% [2] Business Segment Performance - The decorative materials segment generated revenue of CNY 2.985 billion, a decrease of 9.05%; board business revenue was CNY 1.793 billion, down 16.45% [3] - Custom home business revenue was CNY 621 million, an increase of 4.46%, with whole-house customization contributing CNY 309 million, up 3% [3] Sales Channel Insights - Distribution channel accounted for 38.5% of sales, with furniture factory channels at 49.6% and home decoration companies at 8.1% [4] - The company opened 334 new stores and completed 847 channel recruitments in rural markets [4] Gross Margin and Cost Control - The gross margin for decorative materials improved due to cost control measures and increased sales of high-margin auxiliary materials [6] - The company implemented centralized procurement and eliminated inefficient suppliers to enhance cost management [7] Custom Home Business and Policy Impact - The custom home business saw a 46.5% increase in sales through home decoration company channels [8] - National subsidy policies are being leveraged to enhance product pricing advantages and boost brand sales [8] Product Trends - The usage of particle board is on the rise, while the use of ecological board is declining [9][10] International Business Developments - The company is focusing on expanding its export business, primarily in boards and flooring, with management actively participating in international exhibitions [11]