Incident: The company released its three-quarter report for 2024. During the reporting period, net profit to mother and net profit without return to mother were 20.364, 3.145, and 3.069 billion, respectively, +19.44%, +14.12%, and +12.65%, respectively. 24Q3 achieved revenue, net profit to mother, and 6.767, 0.931, and 0.91 billion, respectively, compared with +19.82%, +8.23%, and +3.52%, respectively.

The “two wings” business of waterproofing and coatings is growing rapidly, and the gypsum board and gypsum board+ business is growing steadily. The company's waterproof and coating business achieved revenue of 3.578 billion and 2.548 billion, respectively, in the first three quarters of 24, respectively. The waterproof business continued to grow rapidly against the backdrop of a cumulative decline of 22.2% from January to September 24. The reason behind this is, on the one hand, that the company used its shareholder background advantage to increase customer development for central state-owned enterprises with good credit. On the other hand, the scale of the waterproof industry has seriously shrunk, and the supply side of the industry has accelerated the increase in leading market share. The paint business has achieved significant growth, and the impact of Gabriel's consolidation continues to unleash. Excluding waterproofing and coatings, the company's businesses mainly include gypsum board and gypsum board+ businesses. In the first three quarters of 24, this part of the business achieved revenue of 14.238 billion, a steady increase of +3.71% over the same period last year.

In the first three quarters of 24, the company's international business achieved revenue of 0.171 billion, +121.16% year over year, and achieved net profit of 0.018 billion yuan, +27.39% year-on-year, and a net profit margin of 10.53%.

The cash cow statement remains the same, and the scale and quality of operations have both improved. In the first three quarters of 24, the company achieved overall net cash from operating activities of 2.706 billion, +38.01% year-on-year, and achieved a return on net assets of 13%, or +0.34pct year-on-year. Net cash flow from operating activities excluding funds held on behalf of the headquarters in the first three quarters of 24 was +62.03% and +1983.73%, respectively, and achieved significant growth. The gross margins of the company's waterproofing and coating business were +0.24 and +3.44pct, respectively, in the first three quarters of 24, and the profit level bucked the trend.

There was a year-over-year increase in fees during the 24Q3 period. The 24Q3 company's sales, management, R&D, and financial expense ratios were +0.51, +0.44, -0.3, and -0.06pct, respectively. Overall expenses for the period were +0.59pct year over year. Among them, the sales expense ratio increased year on year, mainly due to the combination of Gabrielle.

Profit forecast and investment rating: Lowering the profit forecast, the company's 24-26 revenue is expected to be 28.157, 31.991, and 36.631 billion, respectively, +25.55%, +13.62%, and +14.5%, respectively, and net profit to mother is 4.08, 4.78, and 5.314 billion, respectively, +15.78%, +17.15%, and +11.18%, respectively. The corresponding PE is 12.84, 10.96, and 9.86, respectively. The company's main business barriers are deep, and both sides of the same coin are open Room to grow and maintain a “Highly Recommended” rating.

Risk warning: demand for completed real estate has declined; the promotion of high-end gypsum board falls short of expectations; raw fuel costs have risen sharply; and the implementation of the “one, two wings” strategy falls short of expectations.