1. In 2022, with the implementation of new tobacco regulation, marginal rationalization of real estate policy and impairment of bulk receivables, the price of raw materials stabilized and decreased, the real estate data bottomed out, and the opportunities of the sector outweighed the challenges. It is optimistic that the valuation will continue to be repaired in 2022. In 2021, light industry manufacturing (Shenwan) rose by 11.65% and the Shanghai Composite Index rose by 4.80% over the same period. Although it slightly outperformed the market, it was a challenging year: 1) in 2021, the exposure of real estate credit risk and the tightening of real estate policies continued to disturb the domestic sales sector; 2) Rising raw material prices, rising sea freight and year-on-year appreciation of exchange rate make exports face increasing income without increasing profits; 3) The “double reduction” policy disturbs the cultural paper and stationery industry; 4) The e-cigarette policy, the uncertainty of tobacco anti-corruption, and the phased rhythm dislocation of leading companies’ one-time small cigarettes overseas have amplified the volatility of the new tobacco sector. The above factors are expected to usher in marginal improvement in 2022, driving the repair of sector valuation.
\u3000\u30002. Home furnishing: under the main line of home furnishing returning to retail and cost downward, we are optimistic that the valuation of 2022h1 stocks will continue to repair. In terms of customized furniture, we believe that the main line of the customized furniture industry in 2022 is to return to retail, make efforts to assemble and move towards the whole family. [ Suofeiya Home Collection Co.Ltd(002572) ] and [ Oppein Home Group Inc(603833) ] are recommended. In terms of software home furnishings, the industry concentration in the domestic market is expected to further improve; Pay attention to the opportunity of export profit restoration brought by the downward cost. [ Jason Furniture (Hangzhou) Co.Ltd(603816) ] and [ Xlinmen Furniture Co.Ltd(603008) ] are recommended.
\u3000\u30003. New type of tobacco: we believe that strengthening supervision will continuously stimulate the innovation ability of excellent leading companies. Under the expectation that the global regulatory policy tends to be stable, new tobacco continues to enter emerging markets. We are optimistic that the leader will catch up in the follow-up of overseas disposable e-cigarettes and increase its share. We recommend [smore international].
\u3000\u30004. Required consumption: we estimate that after the double reduction policy of stationery sector is fully implemented in 2023, the demand for writing instruments of K12 group will be reduced by about 16%, but it will only affect the growth rate, not the slope. The long-term trend of increasing unit price and concentration remains unchanged. We expect the high base to be digested in 2022q3. Under the trend of flat and centralized channels brought by office centralized purchase, the value of leading configuration is prominent, which is recommended [ Shanghai M&G Stationery Inc(603899) ]. The trend of high-end personal care is obvious. The trend of raw materials in 2022 is high and falling. It is recommended to strengthen brand marketing and continue to build a leading enterprise with differentiated perception [ C&S Paper Co.Ltd(002511) ].
\u3000\u30005. Papermaking: the market is expected to hit the bottom. We expect 2022q2-q3 to bring excess returns. We are optimistic about special paper for a long time. Wood pulp system: the demand is weak in 2021, and the prosperity is at the bottom. We expect that the industry will still need one to two quarters to digest inventory and new production capacity. In q2-q3, with the gradual liquidation of small and medium-sized production capacity in 2022, the prosperity of the industry is expected to rebound; The waste paper department continues to be optimistic about the narrowing of the cost difference at home and abroad caused by the diversification of cross-border flow of waste paper fibers, and the profit continues to improve; We will continue to pay attention to the opportunities of special paper subdivision leaders with special performance and many varieties.
Investment suggestions: home furnishing sector: 1) in terms of customization, we recommend [ Suofeiya Home Collection Co.Ltd(002572) ], [ Oppein Home Group Inc(603833) ] and [ Zbom Home Collection Co.Ltd(603801) ] and [ Goldenhome Living Co.Ltd(603180) ] in combination with the proportion of bulk business income, accounts receivable risk and valuation level. 2) In terms of software, it is recommended to accelerate the promotion of independent brands and sink the leading [ Xlinmen Furniture Co.Ltd(603008) ] in channel construction; At the same time, [ Jason Furniture (Hangzhou) Co.Ltd(603816) ], [Minhua holding] and [ Healthcare Co.Ltd(603313) ] are recommended. 3) The new tobacco sector recommends the global atomization electronic cigarette leader [smore international]. 4) The mandatory consumption sector recommends industry leaders with stable operation and more callback [ Shanghai M&G Stationery Inc(603899) ]; The market share of the brand is increasing continuously, and the management team is excellent [ C&S Paper Co.Ltd(002511) ]. 5) Paper sector: we recommend [ Shandong Sun Paper Co.Ltd(002078) ] with strong growth certainty and continuous consolidation of cost advantage. We suggest paying attention to [ Xianhe Co.Ltd(603733) ] and [ Hangzhou Huawang New Material Technology Co.Ltd(605377) ].
Risk warning: exchange rate and raw material price fluctuate greatly; The completion and sales of the real estate did not meet our expectations; Industry competition intensifies; The recovery of consumer demand is slow; The intensity of policy supervision exceeded our expectations.
