Core Viewpoint - The company reported a decline in revenue and net profit for the first half of 2025, but managed to improve its PVC gross margin through enhanced product and service offerings [1][2]. Group 1: Financial Performance - In H1 2025, the company achieved revenue, net profit attributable to shareholders, and net profit excluding non-recurring items of 2.078 billion, 271 million, and 268 million yuan, respectively, representing year-on-year declines of 11.33%, 20.25%, and 21.06% [1]. - In Q2 2025, the company reported revenue, net profit attributable to shareholders, and net profit excluding non-recurring items of 1.183 billion, 157 million, and 154 million yuan, respectively, with year-on-year declines of 12.16%, 15.55%, and 22.25% [1]. - The company’s PPR business gross margin was 57.5% in H1 2025, a decrease of 1.6 percentage points year-on-year, indicating stable performance despite competitive pressures [2]. Group 2: Product and Service Development - The company focused on deepening its product and service model, leading to a gross margin increase for PVC products to 23.5%, up 2.6 percentage points year-on-year, attributed to systematic sales and enhanced service value [1]. - The waterproof business showed steady growth in H1 2025, with an increase in service users and matching rates, while the net water business is undergoing a strategic transition and is expected to face ongoing pressure [2]. Group 3: Cash Flow and Dividends - The company achieved a record high in net cash from operating activities of 580 million yuan in H1 2025, an increase of 290 million yuan year-on-year, primarily due to reduced raw material expenditures [2]. - The company proposed a mid-term dividend of 160 million yuan, with a dividend payout ratio of 58% [2]. Group 4: Future Outlook and Recommendations - The company is expected to see net profits attributable to shareholders of 732 million, 864 million, and 950 million yuan for 2025-2027, with corresponding year-on-year changes of -23.13%, +17.98%, and +10.00% [3]. - Given the company's strong barriers to entry, expected earnings elasticity, and high dividend yield, a "strong buy" rating is recommended [3].

Core Insights - The company reported a revenue of 6.267 billion, net profit attributable to shareholders of 0.953 billion, and net profit excluding non-recurring items of 0.917 billion for the year 2024, reflecting year-on-year declines of -1.75%, -33.49%, and -28.08% respectively [1] - In Q4 2024, the company achieved revenue of 2.494 billion, net profit attributable to shareholders of 0.329 billion, and net profit excluding non-recurring items of 0.305 billion, with year-on-year declines of -5.26%, -41.09%, and -28.72% respectively [1] - The company maintains a strong retail moat, with its core PPR category providing robust support despite a challenging market environment characterized by increased competition and pressure on consumer spending [1] Financial Performance - The company experienced a significant decline in profits, attributed to an increase in sales expenses by 0.117 billion, primarily due to higher employee compensation and marketing expenses [2] - Asset impairment losses increased to 0.086 billion, mainly due to an increase in goodwill impairment provisions related to previous acquisitions [2] - The company achieved a high dividend payout ratio of 99% in 2024, reflecting confidence in sustained high-quality development [2] Future Outlook - Revenue projections for 2025-2027 are estimated at 6.28 billion, 6.78 billion, and 7.499 billion, with year-on-year growth rates of +0.22%, +7.95%, and +10.61% respectively [3] - Net profit attributable to shareholders is expected to reach 1.024 billion, 1.167 billion, and 1.292 billion for the same period, with growth rates of +7.53%, +13.88%, and +10.77% respectively [3] - The company is expected to maintain a strong investment rating due to its deep barriers to entry and high dividend yield [3]