Meeting minutes of receiving institutional investors’ research activities
1、 Institutional Research
Meeting time: February 10-15, 2022
Meeting place: company conference room (No. 69, Tianhu South Road, Qujiang District)
Conference form: teleconference communication
Participants: Wang Yuzhe, Secretary of the board of directors, China International Capital Corporation Limited(601995) , Everbright Securities Company Limited(601788) , Zheshang Securities Co.Ltd(601878) , Huatai Securities Co.Ltd(601688) , Guotai Junan Securities Co.Ltd(601211) securities, Orient Securities Company Limited(600958) asset management, Citic Securities Company Limited(600030) asset management, China Europe Ruibo asset management, Zheshang fund, Nanfang fund, Yinhua Fund, Huaxia Fund, CCB fund, Anxin fund, Wanjia fund, xingyin fund, Xingye fund, Xingquan fund, Golden Eagle Fund, Harvest Fund Tongtai fund, Baoying fund, Qisheng fund, Furong fund, Haifutong fund, Western Lide fund, private equity fund, Shanghai Investment Morgan fund, Jingshun Great Wall Fund, Xingzheng Global Fund, Huatai Baoxing fund, Yuanxin Yongfeng fund, Yong’an Guofu assets, Everbright Yongming assets, Tianfeng Tiancheng assets, montelli assets, yuanlesheng assets, Taiping assets Shiva assets, Haoshan assets, zhongre assets, Haojun investment, Yujin investment, Fengpei investment, Chenghuai investment, model investment, Shicheng investment, qingzhui investment, Chongyang investment, sandeng investment, xingjuruijun investment, Xinyu ginkgo global investment, LINGJI capital, China Agricultural Bank Of China Limited(601288) , Zhongrong International Trust, Shanghai International Trust, life endowment insurance, Ping an endowment insurance The Pacific Securities Co.Ltd(601099) property insurance, Agricultural Bank of China Huili, Bank of Nanjing financial management, Bank of Hangzhou financial management, Oceanlink, txcapital (HK) Limited, Robeco institutional asset management b V. 、 PINPOINT ASSET MANAGEMENT LIMITED 、 PACIFIC ALLIANCEINVESTMENT MANAGEMENT (HK) LIMITED 、 ORCHID PUBLICINVESTMENTMANAGEMENTCOLIMITED、OCEANLINKPARTNERSFUND,LP、NEUBERGERBERMANSINGAPOREPTE. LIMITED、LIBRARYRESEARCHLIMITED 、 GREEN COURT CAPITAL 、 GOLDSTREAM CAPITALMANAGEMENT LIMITAD 、 ELEVATION INVESTMENT MANAGEMENTLIMITED、DEXIN INVESTMENT LIMITED
2、 Main contents of teleconference communication
1. Introduction to the development history of the company
Since its establishment in 2001, the company has always taken high-performance paper-based functional materials as its main business, closely followed the demand changes in the fields of consumption and industry, and achieved 20 years of rapid growth. As one of the largest R & D and production enterprises of paper-based functional materials in China, the company is committed to providing one-stop solutions for downstream customers. It has five production bases in China, including Zhejiang Qujiang, Henan Neixiang and Zhejiang Changshan, Guangxi Laibin (under construction) and Hubei Shishou (under construction). The company and its holding subsidiaries and joint ventures now have 50 modern papermaking production lines, One pulp production line, 21 coating production lines and 7 super calenders, and has the production capacity of the whole industrial chain of forest land, chemical industry, pulping, energy, logistics, base paper and paper products. The industrial width and industrial depth layout are relatively perfect. Up to now, the annual production capacity of the company and its joint venture company has reached 1.1 million tons, and there are more than 2600 downstream direct sales customers. At the same time, the company also takes the R & D and manufacturing of paper-based functional materials as the core, actively promotes the realization of made in China 2025, implements the intelligent management of factories, and actively arranges in new materials, new energy and upstream and downstream integration such as energy manufacturing, chemical materials, industrial water treatment and solid waste treatment, distributed photovoltaic power generation, logistics and C-end products. While expanding its main business and giving full play to its scale advantages, the company’s product diversification advantages, flexible production capacity, technical scheme advantages, environmental protection governance advantages, management innovation advantages, brand customer advantages and the company’s “home culture” advantages are important guarantees for the stable development of Xianhe Co.Ltd(603733) . At the same time, Xianhe also attaches great importance to sustainable development, actively promotes the use of new energy, and is contributing to the sustainable development of the industry together with suppliers and customers upstream and downstream of the industrial chain.
2. Please introduce the situation of the fourth quarter and the progress of the company’s new projects
In the fourth quarter of 2021, the company’s overall production capacity was at full capacity, and the market demand was relatively strong, which was not affected by some market economic environment. On the cost side, the company had pressure on the raw material side and energy side in the fourth quarter. In the fourth quarter, the company was generally affected by coal price, steam price and electricity price. In addition, the cost increased rapidly due to production and power restriction. Different from the cost of raw materials such as wood pulp, the energy price increases greatly in the short term, which will lead to a temporary rapid rise in cost. Overall, the impact of rising energy costs on enterprises is temporary. At the same time, the company is also actively developing market strategies to respond, and plans to gradually adjust the market prices of different products in the first quarter and implement them in the second quarter.
The company continues to rapidly promote the construction and operation of projects in Guangxi and Hubei, so as to avoid the pressure of dual control and make full use of the advantages of local manpower, transportation and raw materials. At present, the projects in Guangxi and Hubei are in the period of rapid promotion, and have obtained important approvals from some relevant departments. For details, please refer to the company’s project progress announcement disclosed by the company in legal information disclosure media such as Shanghai Stock Exchange.
3. Will the company adjust the price in the near future according to the sales situation of Q1 in the past 22 years
At present, the upstream energy price of the company is in a stable state, which is better than the operation of the company. After the Spring Festival, it is the traditional peak season of the market, and the overall delivery volume of the company will be improved. In terms of the current market environment, the company has made positive market price adjustment to deal with it, and the subsequent company will continue to make corresponding adjustments according to the development and changes of the market.
4. What is the market demand for decorative paper and what is Xiawang’s development plan for the decorative paper market? Xiawang paper has been committed to one-stop service in the high-end home market, and the product quality of Xiawang paper has always been at the leading level in the world. As one of the most mature companies in China’s overseas market, Xiawang paper’s overseas market layout has been improved year by year, and will continue to be committed to the common layout and development of Chinese and foreign markets. In the future, the application field of finishing materials in the market will gradually increase, and Xiawang paper is also expanding its production capacity, and will continue to provide the best substrate solution for the downstream market.
5. Xia Wang invested 70000 tons of production line at the end of December last year. At present, the production capacity and category distribution of this production line
Xiawang PM5 production line has been in full production since it was put into operation in December 2021. At present, there are full orders on hand.
The category of PM5 production line involves all products covered by Xiawang paper market at present.
6. What is Xiawang’s gross profit margin
Xiawang paper continuously improves the added value of products through supply chain integration and high added products and services. In the future, the company will continue to develop high margin products.
7. What are the main categories of the production line invested in Q4 in the 21st year? When will the food cardboard production line be put into operation this year
Xiawang paper PM5 project has been successfully put into operation in late December 2021, releasing a production capacity of more than 70000 tons; Zhefeng pm9 project in Changshan area of the company has been put into operation in November 2021, releasing a capacity of 40000 tons, and the two production lines are full-load production. In addition, the company carried out the technical improvement project of Zhefeng PM4 in 2021, restoring the production capacity of 40000 tons. The new production capacity of the company mainly focuses on release materials, transfer materials, food packaging, medical packaging materials, etc. The plant of the 300000 ton food cardboard project of the company is under construction. It is expected to complete the construction of the plant in May 2022 and start production in July.
8. What is the power supply ratio of the company’s own thermal power plants in Hubei and Guangxi bases
The company will increase its power generation and steam supply capacity and reduce the risks caused by changes in energy costs.
9. The planned output of Guangxi is 2 million tons. Is there any change in the future direction
The future production line planning direction of Guangxi project will still focus on food, medical treatment, transfer printing and daily consumer materials, and it is planned to transfer part of the product capacity of Quzhou base to Guangxi base for production later. Quzhou base will undertake the R & D and production of more high value-added customized products and deep-processing products. Guangxi base will make more use of the advantages of local raw material resources, transportation and labor to carry out the R & D and production of large-scale products and specialized products.
10. Will the technical advantages of crane, such as film coating, make the product price higher
The company will actively develop the product end by using the existing technology, and make more efforts in the coating deep-processing capacity to achieve the development of fully degradable materials; At the same time, the company will also actively develop new coating technology with upstream equipment suppliers and achieve a breakthrough in the application end.
11. I would like to ask about the export situation of the company’s tobacco supporting materials last year and the cooperation with overseas tobacco giants. Zhejiang Tangfeng Special Paper Co., Ltd., a subsidiary of the company, has entered the overseas tobacco market and is steadily supplying cigarette binding base paper products to major well-known tobacco companies at home and abroad, such as Philip Morris International PMI, bat of British American Tobacco and JTI of Japan Tobacco. In 2022, the company’s international business will be further developed. After the logistics returns to normal, the overseas market will have the opportunity to achieve explosive growth.
12. What is the development prospect of new tobacco terminal and electronic cigarette
The company has an early layout in the tobacco industry, and its main products include filter tip and cigarette case lining materials such as traditional combustible smoke and new heating non combustible tobacco. At the same time, the company also supports slow-release sheet materials, paper-based filter rod materials, non tobacco HNB paper tubes and other materials. The company has accumulated a lot of technology in the tobacco packaging industry. At present, the company is constantly doing product research and development and replacement, constantly launching relevant consumables products supporting traditional combustible cigarettes and new-type tobacco, such as paper filter rods, HNB impermeable materials, etc., and actively participating in the development of slow-release materials and other additive materials. The company is a global supplier of tobacco supporting materials and has stable cooperation with famous tobacco giants at home and abroad. The company will continue to accumulate technology and fulfill the responsibilities of raw material suppliers, provide more perfect overall solutions for the tobacco industry and wait for the further development of the market.
13. What is the impact of the rebound in wood pulp prices on the company
At present, the company’s stock of wood pulp and wood pulp is in a stable state, and the company’s stock of wood pulp and wood pulp is in a timely manner. The company has a perfect and standardized management system, can cope with relevant market changes, and the overall periodicity is weak.
14. What is the company’s plan for paper straw
Paper straw is the main business of Zhejiang Kerui new materials Co., Ltd., a wholly-owned subsidiary of the company. The company has obtained nearly 90 mu of industrial land through the signboard procedure for the production and promotion of Kerui new materials’ end products using paper instead of plastic. At present, it is purchasing equipment. It is expected to complete the construction of phase I production capacity of the project from June to July this year, which will cover paper straw, silicone oil materials Paper cups and bowls. Quzhou base is planned to do the preliminary development of products. After the process technology is mature, the production capacity will be moved to Hubei base to develop special high-performance paper-based new materials by using local plant-based materials.
15. How about the production time, output and profit of 300000 tons of food cardboard in 2022
The plant of the 300000 ton food cardboard project of the company is under construction and will be put into operation on time according to the progress. It is expected to be completed in May and put into operation in July this year. There is still huge domestic substitution space for food cardboard in China, and there is more than 300000 tons of substitution space for liquid packaging alone in the Chinese market. In addition, our products are mainly reflected in the application field and are expected to be applied to food packaging and commodity packaging. By the end of 2021, the company has more than 2600 valuable downstream customers, and the number of customers and procurement volume are increasing continuously.
Xianhe Co.Ltd(603733) board of directors February 16, 2022
