Oriental Yuhong (002271.SZ): 3Q26 miss mainly on impairments; DD% topline growth upbeat, yet GPM challenge aggravated; Buy

Oriental Yuhong reported below expectation 3Q26 results, with net profit down 82% yoy to Rmb44mn, mainly dragged by substantial impairment losses of Rmb410mn and higher-than-expected finance expenses. Excluding impairment loss, adjusted net profit came in at down 14% yoy and 13% below GSe. Alongside a surging bitumen price, 3Q26 GPM declined to its historically second-lowest level of 22.8% (down 2pp yoy and 5pp qoq), a deterioration pace steeper than expected. On the positive side, 3Q26 topline growth of +12% yoy came in above expectation, with retail channel sales delivering robust 20%+ yoy growth, overseas revenue ramping up at over 180% yoy (over 50% stripping off M&As) and steady mortar revenue growth (up mid-teen % yoy);