In 2023, 3Trees achieved a revenue of RMB12.2 billion, a year-on-year increase of 12.1%, achieving growth against the trend.
According to the data of the Coating Industry Association, the main business income of the mainland paint industry in 2023 will be 404.48 billion yuan, a year-on-year decrease of 4.5%, and the market is shrinking. The main reason for 3Trees' rapid growth against the trend is that it has continued to adjust its structure strategically and deploy new momentum in recent years. The retail business focused on interior wall renovation, rural markets, and Kiev materials, while the engineering business vigorously expanded its non-real estate business. From the perspective of the first quarter of 2024, against the background of a 20% decline in real estate completions, 3Trees' main business revenue continued to maintain a contrarian growth trend.
While the overall quality of the company has maintained steady development, 3Trees has invested heavily in R&D, with steady growth in R&D personnel and funds, and a continuous increase in the number of patents. With the advent of the era of interior wall renovation, 3Trees is expected to usher in more development opportunities by virtue of its advantages in high-end retail transformation and technological barriers.
The compound growth rate of the main business is as high as 20.64%, and the quality of operation has been steadily improved
3Trees is a large-scale coating enterprise focusing on the R&D, production and sales of home decoration coatings, architectural coatings, furniture paints, adhesives and other fields. The 2023 financial results show the company's solid momentum.
During the reporting period, 3Trees achieved revenue of RMB12.2 billion, a year-on-year increase of 12.1%, achieving growth against the trend. According to the data of the Coating Industry Association, the domestic coating industry achieved revenue of 404.48 billion yuan in the same year, a year-on-year decrease of 4.5%, and the market as a whole showed a shrinking trend. However, from the perspective of the industry pattern, the situation of the double leader in the coating industry is becoming more and more significant, and 3Trees is one of the leaders.
Since 2019, the compound growth rate of 3Trees' main business revenue has reached 20.64%, mainly due to the company's continuous strategic adjustment, optimization of structure, and active deployment of new momentum in recent years. In the retail business, the company focused on interior wall renovation, rural markets and Kiev materials, while in the engineering business, the company vigorously expanded its non-real estate business and further broadened its market share.
Source: Choice
It is worth noting that with the continuous increase in the proportion of retail business and the steady development of engineering business, 3Trees' cash flow position has been greatly improved, and the quality of operation has also been significantly improved. As of the end of 2023, the company's net operating cash flow reached 1.4 billion yuan, with a net cash ratio of 8.23 times, and continued to maintain an improvement trend in the first quarter of 2024. In addition, the company's debt-to-asset ratio is also steadily decreasing, with a decrease of 1.13 percentage points in 2023.
In the first quarter of 2024, despite the 20% decline in the number of real estate completions, 3Trees' operating performance still maintained a growth trend against the trend. In the first three months of this year, the company achieved a total operating income of 2.066 billion yuan and a net profit attributable to the parent company of about 47.08 million yuan, both of which achieved positive growth, which indicates its future development prospects.
R&D investment exceeded 289 million yuan, and the number of patents increased steadily
In 2023, 3Trees made a significant investment in R&D, aiming to continuously improve its core competitiveness and market share, and become a world-class leading coating company.
From the perspective of scientific research data, the number of R&D personnel of 3Trees will reach 697 in 2023, showing a steady growth trend. R&D expenditure reached 289 million yuan, an increase of 26.13 million yuan compared with last year. The company has carried out continuous health and performance upgrades for products in many fields such as interior and exterior wall coatings, art paints, Kiev materials, flooring, industrial paints, etc., and has developed a total of 278 new products and launched a number of blockbuster new products.
Source: Choice
In addition, in 2023, 3Trees and its subsidiaries applied for a total of 130 invention patents, an increase of 61 patents year-on-year, and the cumulative number of valid patents has reached 753, demonstrating the company's achievements and strength in innovation.
The era of interior wall renovation is coming, and the recoating market has become a new blue ocean in the paint industry
As a downstream application industry of the real estate industry, although the coating has been negatively affected by the real estate industry in recent years, with the steady growth of the country's per capita GDP, its demand will also grow simultaneously. More importantly, the coatings industry has a golden track with its recoating properties.
Judging from the experience of overseas markets, renovation consumption has become an important scene of household consumption in developed countries. In the United States, for example, more than 80% of the demand for decorative coatings comes from refurbishment and maintenance. Overseas paint companies such as Sherwin-Williams and PPG have relied on the refurbishment business to achieve steady growth, and have stable and excellent cash flow and a net profit margin of about 10%.
At present, the repainting cycle of domestic housing is about 10 years, and the repainting frequency is significantly lower than the average of 5 years in Europe and the United States. However, with the continuous increase in the proportion of second-hand housing transactions (40% nationwide, generally more than 50% in key cities), the era of interior wall renovation has arrived. The rise of the recoating market will significantly compensate for the shrinkage of the new market and bring about a change in the logic of the industry.
As the coating industry places more emphasis on service attributes, the application scenarios of coatings are rapidly changing to high-quality, personalized recoating. At the same time, the requirements for design, construction and service of the home renovation policy vigorously promoted by the state are also constantly improving, which will promote the improvement of the value of the industry and bring about the upward revaluation of the enterprise value of "product + service".
In the future, there will be no market for low-quality and low-cost coating products, and 3Trees' in-depth layout in the high-end retail transformation, as well as the scientific and technological barriers and brand effect formed by deep cultivation in the industry, will have a positive impact on the development of the enterprise.