Three Trees (603737): Channel Expansion Achieves Significant Growth and Growth on the Fast Track

Event overview.

Three Trees announces 2019 performance forecast.

The company expects to achieve net profit attributable to mothers in 20193.


2 billion yuan, an annual increase of 69-89%, corresponding to the net profit attributable to mothers in the fourth quarter of 20191.


48 ppm, a ten-year increase of 11.



The channel expansion has achieved remarkable results, driving a substantial increase in sales.

The company’s performance basically met our expectations.

Benefiting from the development of the B-end channel, the company’s coating sales volume growth in 2019 is strong. We expect the company’s sales volume to maintain a 50% growth in the fourth quarter of 2019, which will result in the company’s sales growth rate maintaining 50-60%.Revenue from construction business increased by 355% a year, further confirming its good channel expansion.

Cost reduction Costs are well controlled and profit margins are improved.

In 2019, the company’s main raw material titanium dioxide, emulsion and other prices fell by 8-20%, which led to the company’s coatings business gross profit margin rising. At the same time, as the company’s scale effect was gradually realized, the company’s expense ratio decreased.Rate drops down 2.

2 units.

In addition, the company’s non-recurring gains and losses in 2019 will increase by 16 million yuan each year after tax deduction, further increasing profits.

Increased concentration, rich domestic overtaking, and will still be on the fast track to development in the next 2-3 years.

According to data from the China Coatings Association, the CR100 in the coatings industry has increased by about 15 percentages in the past two years, and the revenue and profit growth of domestic-funded enterprises (about 15%) has clearly surpassed that of foreign enterprises (optionally slightly reduced).

Taking into account 1) downstream real estate, the concentration of the infrastructure industry has increased, and 2) more flexible project selection and response mechanisms for domestic-funded enterprises, we believe the above trend will continue.

In addition, the company’s acquisition of Dayu Waterproofing 深圳桑拿网 in 2019, and further integration of protection and coating, is expected to further enhance the company’s competitiveness in the hardcover and concentrated mining era. Therefore, we believe that the company will still be on the fast track in the next 2-3 years.

Investment Advice.

Slightly reduced sales assumptions, and concurrently slightly reduced the company’s net profit forecast for the mother to 2019-20214.

6% / 3.

1% / 0.

1% to 4.



86 ppm, an increase of 80 in ten years.

6% / 40.

7% / 39.


Taking into account 1) the company ‘s first- and second-line expansion of the company ‘s C-end has achieved initial results, product attributes have improved, and 2) the consolidation of the waterproofing industry has accelerated and cash flow is expected to improve.34% to 109.

08 yuan (Original: 夜来香体验网 81.

38 yuan), maintain “Buy” rating.

risk warning.

The channel development was less than expected, the cost was higher than expected, and systemic risk.