\u3000\u3000 Quzhou Wuzhou Special Paper Co.Ltd(605007) (605007)
Event: the company signed a project investment contract with Hanchuan Municipal People’s government, and the 4.49 million ton pulp and paper integration project landed in Hanchuan. On January 26, the company signed the investment contract of Quzhou Wuzhou Special Paper Co.Ltd(605007) pulp and paper integration project with the people’s Government of Hanchuan City, Hubei Province. The investment project involved is “pulp and paper integration project with an annual output of 4.49 million tons”. Production content: the production capacity of 4.49 million tons of pulp and paper is planned to be 1.55 million tons of pulp and 2.94 million tons of machine-made paper, as well as supporting public facilities such as central heating, sewage treatment facilities, comprehensive utilization of solid waste and logistics wharf. The investment amount is about 17.3 billion yuan. The company plans to solve the capital problem through bank financing + equity financing. The project is planned to be completed and put into operation from the 14th five year plan to the 15th five year plan (6-8 years). The company’s total pulp and paper production capacity will exceed 6 million tons after reaching the production capacity.
The expansion of advantageous categories and the extension of comprehensive special paper are moving towards the integration of pulp and paper.
Expansion of advantageous categories: the company will further expand the production of advantageous paper types such as food card and grasin paper, so as to consolidate its absolute leading advantage in the scale of subdivision track; Extension to comprehensive special paper: the diversification strategy of category expansion, on the one hand, optimizes the company’s product structure to avoid sharp fluctuations in performance caused by a single paper type; On the other hand, it can fully digest the supporting cogeneration devices, realize the recycling of water and heat resources, and maximize the income under the same conditions. Pulp paper integration fills the gap of upstream layout: the production capacity extends to the upstream pulping link, improves the self-sufficiency rate of raw materials, suppresses the fluctuation of pulp price, and can effectively ensure the stability of profitability.
It is preferred to accelerate the production expansion of boom track and enter the night before the medium and long-term accelerated expansion period.
On the eve of entering the medium and long-term accelerated expansion period, the company seized the industry increment under the high boom trend. Demand side: food grade white card has three major supports: Plastic ban and restriction, chain catering growth and import substitution. From 2011 to 2019, the industry scale increased from 1.07 million tons to 2.05 million tons, with a compound growth rate of about 8.45%. Under the background of plastic restriction, the growth rate is further upward, and the demand is expected to reach about 4-5 million tons in 2030. From the perspective of supply pattern, food packaging paper has double barriers of natural process and sales channels. Relying on the technical transformation team with the founder as the core, the company maximizes the cost advantage and realizes a high balance of efficiency and flexibility; At the sales end, the company’s downstream customers have strong stickiness. At the same time, it has the characteristics of strict certification requirements and long certification cycle, and the industry concentration is natural. With the extension of the old customer system and the large number of new customers, we continue to maintain the leading edge. In the short and medium term, the Growth Logic of the company lies in the continuous expansion of the scale and market share of the high boom track; In the long run, the EIA indicators are tightening day by day, and the scarcity of high-quality capacity expansion is prominent. On the eve of medium and long-term high growth, the company has the systematic scarcity characteristics of high roe, high growth and undervalued value, and has the dual space of EPS high growth and valuation return. We expect the company to achieve an operating revenue of RMB 3.940/64.08/7.802 billion from 2021 to 2023, with a year-on-year increase of 49.5% / 62.6% / 21.8%; The net profit attributable to the parent company was 409 / 695 / 917 million yuan, with a year-on-year increase of 20.9% / 69.5% / 32.0%; The corresponding PE is 21.0x, 12.38x and 9.4x respectively, maintaining the “buy” rating.
Risk tips
The price of raw materials fluctuated sharply and the production capacity was less than expected.
