利润增长稳定，扩张进展顺利。

Profit Growth Steady, ExpansionProgressing Smoothly Rating (Maintain):BUYTarget price(RMB):25.33 Huatai Research Annual Results Review 18 May 2025│China (Mainland) Other Building Materials AnalystFANG YanheSAC No. S0570517080007SFC No. BPW811fangyanhe@htsc.com+(86) 755 2266 0892 CoCreationGrassreported2024revenue/attributablenetprofit(NP)ofRMB2,952/511mn (+19.92/+18.56% yoy). In 4Q24 alone, the company achievedrevenueofRMB693mn(+27.08/-7.60%yoy/qoq)andattributableNPofRMB118mn(+48.94/+6.54%yoy/qoq),inlinewithourpreviousforecastofRMB110mn.In1Q25,thecompanypostedrevenue/attributableNPofRMB793/156mn(+15.27/+28.73% yoy), maintaining robust growth. Consideringthecompany’ssteadycapacityexpansionandleadingmarketposition,wemaintain our BUY rating. AnalystHUANG YingSAC No. S0570522030002SFC No. BSH293huangying018854@htsc.com+(86) 21 2897 2228 Key data Sales sustained steady growth in 2024, core GPMdisruptedIn 2024, the company’s sports turf/leisure turf/paving segments achieved revenue of RMB590/2,050/290mn, up 6.38/22.43/37.18% yoy. Domestic teams improvedtheir market development capabilities, while export teams focused on refinedoperations in key regions, leading to higher market share acrossproducts. In2024, gross profit margin (GPM) for the artificial turf business came in at 30.17%,down 1.09pp yoy, with GPM for sports turf/leisure turf at 34.78/28.94%, down1.2/1.9pp yoy. The decline in GPM mainly stemmed from intensified competition incertain markets and rising demand for low-end products amid global inflation, inour view. In 1Q25, overall GPM reached 32.55%, up 2.47pp yoy, likely driven bycontinued raw material cost declines,in our view. Expense ratio declined in 2024; operating cash flow improved yoyIn 2024, the company’s overall expense ratio was 10.0%, down 0.96pp yoy. Specifically,sales/administrative/R&D/financialexpenseratioscameinat5.03/3.73/3.06/-1.79%, changing by+0.16/-0.44/-0.31/-0.37pp yoy. The increase insalesexpense ratio was mainly due to stock-based and cash incentives and higherstaff compensation, in our view. In 1Q25, overall expense ratio was 9.39%, down0.17pp yoy. Operating cash flow came in at RMB466mn in 2024, up 14.2% yoy,with cash received-to-operating revenue ratio/cash paid-to-operating cost ratio at97.2/92.7% (-0.1/+0.18pp yoy). In 1Q25, net operating cash flow was RMB59mn,up RMB38mn yoy. As of end-1Q25, the debt-to-asset ratio/interest-bearing debtratio stood at 20.11/9.23%, remaining at relatively low levels. Source:Wind Capacity expansion progressing steadily; leadership position intactOn the capacity front, the company’s Phase III Vietnam base project began construction in 2Q24. The Mexico base project has obtained the land ownershipcertificate buthas not yet commenced construction. Once fully operational, totalannual production capacity is expectedto reach 172mn sqm,per the company.According to the company’s annual report, its global market share reached 16.7%in 2023. Earnings forecasts andvaluationGiven the steady progress in capacity expansion and robust sales growth in 1Q25, we maintain our 2025/2026 forecasts and introduce our 2027 EPS estimate atRMB1.49/1.76/2.06. Given lingering uncertainties over tariffs, wevalue the stock at17x 2025EPE(previous:18x),belowitspeers' averageof23.7xon Windconsensus,for our target price of RMB25.33 (previous: RMB26.84). Maintain BUY. Risks: slower demand growth for artificial turf than we expect; global oil pricevolatility; significant ocean freight volatility. Source:Wind, Huatai Research Source:Wind, Huatai Research Full financials Disclaimers Analyst CertificationI/We, FANG Yanhe, HUANG Ying, hereby certify that the views expressed in this report accurately reflect the personal views of the analyst(s) about the subject securities or issuers; and no part ofthe compensation of the analyst(s) was, is, or will be, directlyor indirectly, related to the inclusion of specific recommendations or views in this report. General Disclaimers and DisclosuresThis research report has been prepared by Huatai Financial Holdings (Hong Kong) Limited (hereinafter referred to as“HFHL”).The information herein is strictly confidential to the recipient. This report is intended for HFHL, its clients and associatedcompanies. Any other person shall not be deemed a client of theCompany merely from his or her receipt of this report. This report is based on information deemed reliable and publicly available by HFHL, but HFHL and its associated company(ies)(collectively, hereinafter“Huatai”)makes no guarantee as to the accuracyor completeness of such information. The opinions, assessments and projections contained herein only reflect the views and judgments at the issuance date. Huataimay issue research reports that contain inconsistent views, assessments and projections with those set out herein at differenttimes. The prices, values and investment returns of the securities or investment instruments referred to herein may fluctuate.Past perfor