Analysis of Net Profit Growth Drivers for Dongpeng Holdings Q3 2025

Based on the obtained financial data and market analysis reports, I will provide a detailed analysis of the drivers behind Dongpeng Holdings’ net profit growth in the third quarter of 2025.

According to research report data from Tianfeng Securities [1]:

• The first three quarters
  period expense ratio was 19.08%, down 1.09 percentage points year-on-year
• The company disclosed that the
  sales and administrative expense ratio decreased by 1.54 percentage points year-on-year

The direct effect of the lower expense ratio is that profit growth was achieved despite declining revenue. Assuming a 1 percentage point decrease in expense ratio, based on RMB 4.5 billion in revenue, the expense savings would be approximately RMB 45 million, which significantly contributes to net profit.

• The gross profit margin for the first three quarters was 31.10%, a year-on-year decrease of only 0.13 percentage points (31.23%→31.10%) [1]
• The gross profit margin improved in the Q3 single quarter, indicating that cost control was also effective
• Amid the overall pressure on the building materials industry and fluctuations in raw material prices, maintaining a stable gross profit margin is commendable

• Revenue from the large-format ceramic tile retail channel
  increased 8.03% year-on-year
  , with sales area
  growing 14.96% year-on-year
  [2]
• The proportion of this channel continues to increase, and the optimized channel structure has brought better profit contributions
• A total of 196 new stores were opened and 224 stores were renovated and upgraded in the first three quarters, strengthening the terminal brand display and service capabilities [2]

• The proportion of flagship ceramic tile products increased to
  28.50%
  , with transaction prices rising sequentially [3]
• The increased proportion of high-margin products has a positive contribution to the overall profit margin

• Inventory and accounts receivable turnover has accelerated
• Cash flow performance is excellent, with operating cash flow increasing 33.19% year-on-year [3]

1. Expense control is an important contributor
   , but not the only or main reason
2. Channel structure optimization
   (retail channel growth of 8%+) is one of the core drivers, reflecting the effectiveness of the company’s “deeply cultivate the retail track” strategy
3. Stable gross profit margin
   provides a fundamental guarantee for profit growth
4. Product structure optimization
   (increased proportion of flagship products) and
   improved operational efficiency
   have further consolidated profitability

As stated in the company’s third quarterly report: “The company continues to consolidate its systematic operational capabilities through a combination of measures such as deeply cultivating advantageous retail channels, strengthening product innovation, deepening lean operations, and precise expense control” [3]. The net profit growth reflects the improvement of comprehensive operational capabilities, rather than relying solely on expense reduction.

[1] Tianfeng Securities Research Report - Performance Review of Dongpeng Holdings Q1-Q3 2025
[2] Sina Finance - “Dongpeng Holdings: Net Profit of RMB 349 Million in First Three Quarters, Up 13.09% YoY” (https://finance.sina.com.cn/roll/2025-10-27/doc-infvkcqm0387732.shtml)
[3] Third Quarterly Report of Guangdong Dongpeng Holdings Co., Ltd. 2025 (http://static.cninfo.com.cn/finalpage/2025-10-28/1224743828.PDF)