Core Viewpoint - The report from Open Source Securities indicates that Weixing New Materials has significantly improved its Q2 performance, showing stable operational growth despite a challenging macroeconomic environment in the first half of 2025 [1] Company Performance - In the first half of 2025, the overall industry is under pressure with a decline in total volume and intensified market competition, impacting the company's revenue and profitability [1] - The core products, PPR pipes and fittings, have maintained relatively stable revenue and profitability, while the profitability of PVC products has improved [1] Strategic Initiatives - The company emphasizes a "three high" positioning strategy to enhance brand influence and strengthen customer loyalty [1] - It has established over 50 sales companies, more than 30,000 marketing outlets, and over 1,700 professional marketing service personnel nationwide, actively expanding its global marketing network [1] Cost Management - The company is solidifying internal management and enhancing cost control by strictly managing non-essential expenditures, aiming to improve efficiency amid industry pressures [1] Market Outlook - With supportive economic policies aimed at stabilizing the real estate market and boosting consumption through trade-in programs, the real estate post-cycle industry is expected to benefit, further highlighting the company's brand advantages and potential for performance growth [1]

Investment Rating - The investment rating for the company is "Buy" (maintained) [1] Core Views - The company's Q2 performance showed significant improvement compared to Q1, with a stable operational outlook. Despite a year-on-year decline in revenue and net profit for the first half of 2025, the second quarter saw a quarter-on-quarter revenue increase of 32.14% and a net profit increase of 38.36% [1] - The company is adjusting its profit forecasts due to weak terminal consumer demand and intensified competition in the industry. The expected net profits for 2025-2027 are projected at 0.852 billion, 1.148 billion, and 1.165 billion respectively, with corresponding PE ratios of 20.6, 15.3, and 15.1 times [1] - The company is expected to benefit from economic stabilization policies and a recovering real estate market, which will enhance its brand advantage and performance growth [1] Revenue and Profitability - In H1 2025, the company achieved total revenue of 2.078 billion, a year-on-year decrease of 11.33%, and a net profit of 0.271 billion, down 20.25% year-on-year. The Q2 revenue was 1.183 billion, a year-on-year decrease of 12.16% but a quarter-on-quarter increase of 32.14% [1][2] - The company's core products, including PPR, PE, and PVC series, reported revenues of 0.933 billion, 0.411 billion, and 0.290 billion respectively, with year-on-year growth rates of -13.04%, -13.28%, and -4.21% [2] - The overall gross margin for H1 2025 was 40.50%, a decrease of 1.61 percentage points year-on-year, with specific margins for PPR, PE, and PVC products at 57.53%, 26.91%, and 23.54% respectively [2] Cost Management and Cash Flow - The company's expense ratio increased slightly to 24.99% in H1 2025, with sales, management, R&D, and financial expense ratios at 15.05%, 6.98%, 3.37%, and -0.40% respectively [3] - Operating cash flow for H1 2025 was 0.581 billion, a significant year-on-year increase of 99.10%, primarily due to reduced raw material purchases [3] Strategic Initiatives - The company is focusing on enhancing brand value and competitive advantages by expanding its marketing network and controlling unnecessary expenditures to improve efficiency [4] - It has established over 50 sales companies and more than 30,000 marketing outlets, aiming to strengthen customer loyalty and explore overseas growth opportunities [4]