Skshu Paint (603737 CH) Hold: Cost inflation adds to margin pressure in an extremely competitive market

研报英文原文证据摘录

Skshu Paint (603737 CH) Hold: Cost inflation adds to margin pressure in an extremely competitive market

11 May 2026

Equity Research Report

Skshu Paint (603737 CH) EquitiesChemicals

Hold: Cost inflation adds to margin pressure in an

extremely competitive market China

◆ 1Q26 earnings miss due to cost pressures, intense competition, MAINTAIN HOLD

and higher contribution from low-margin auxiliary products

TARGET PRICE (RMB) PREVIOUS TARGET (RMB)

◆ Structural cost pressures to weigh on GPM, while opex

47.00 44.00 discipline may drive NPM growth in 2026

SHARE PRICE (RMB) UPSIDE/DOWNSIDE◆ Maintain Hold; raise TP to RMB47.00 (from RMB44.00)

45.48 +3.3%

Lower estimates on missed GPM. Although Skshu’s revenue grew 14% y-o-y in 1Q26, (as of 07 May 2026)

the higher price of key raw materials, particularly crude oil and TiO2, drove GPM down MARKET DATA

sequentially from its elevated level of 37% in 4Q25 to 31% in 1Q26 (flat y-o-y), reversing Market cap (RMBm) 33,556 Free float 98%

Market cap (USDm) 4,933 BBG 603737 CH

the margin expansion trend seen over the past few quarters. As a result, net profit missed 3m ADTV (USDm) 34 RIC 603737.SS

our forecast, increasing by just RMB107m. Given structurally higher input costs due to

FINANCIALS AND RATIOS (RMB)

geopolitical disruptions and weaker-than-expected 1Q26 profitability, we lower our 2026- Year to 12/2025a 12/2026e 12/2027e 12/2028e

27 earnings forecasts. With this report we introduce our estimates for 2028. We believe HSBC QH EPS 1.05 1.30 1.75 2.07

HSBC QH EPS prev 1.36 1.62 1.97 na

Skshu is trading at 35x 2026 PE, which already reflects its implied 29% earnings CAGR in Change (%) -22.8 -19.4 -11.3 na

2025-27e. As a result, we maintain our Hold rating on the stock. Consensus EPS 1.28 1.53 1.93 2.17

PE (x) 43.3 34.9 26.0 21.9