C&S Paper Co.Ltd(002511) (002511)
Among the top 4 enterprises in China's household paper industry, they started the latest and caught up. The company is a member of the first echelon in China's household paper industry, With three other companies (HengAn international, Weida international and jinhongye) started the latest, but developed rapidly, and the gross profit margin has jumped to the first place. In recent years, the company has paid attention to diversified product layout and increased the proportion of personal care products with high gross profit, and the gross profit margin still has room to rise in the future. The company's management has rich experience and is bound with the company's interests through equity incentive + employee stock ownership plan. If the performance in 2021q4 reaches The target can complete the implementation of the second equity incentive.
The industry continues to develop and the concentration is expected to increase. China's per capita consumption of household paper still lags behind that of developed countries. With the upgrading of consumption and the improvement of consumers' awareness of health protection during the epidemic, the market scale of China's household paper industry will grow steadily. At the same time, the concentration of China's household paper industry is lower than that of the United States, Japan and other countries, with Cr5 of 30%, which still has a large room for rise compared with the market share of 60% in the United States. In addition, with the increasingly stringent environmental protection policies, some small enterprises whose production cannot meet the standards will be eliminated, and the industry concentration is expected to increase. The company is in the first echelon of the industry, and the market share is expected to increase rapidly.
It is difficult for the pulp price to rise sharply in the short term, and the pulp price and stock price are linked. Due to sufficient port inventory and new global pulp production capacity, it is difficult to predict that the pulp price will rise sharply in the short term from the perspective of wood pulp supply and demand. Wood pulp price accounts for 40% - 60% of the company's production cost. The change of pulp price directly affects the company's gross profit margin and secondary market performance. According to historical data observation, this transmission will be reflected in 6-10 months. The pulp price began to fluctuate and decline in May. It is expected that the company's profit level will be gradually improved in the future.
Products, channels, production capacity and marketing jointly promote the future development of the company. In terms of products, the company continues to increase R & D investment to support the diversified development of its products, continuously improve the sales proportion of high-end, high gross profit products and non roll paper, and continuously optimize the product structure. In terms of channels, GT (traditional dealer channel), Ka (large chain store channel), AFH (commercial consumer goods channel), EC (e-commerce channel), RC (new retail channel), SC (mother infant channel) the development model of six channels goes hand in hand, among which the e-commerce channel is growing rapidly. In terms of production capacity, the company is gradually distributing national production capacity and expanding steadily at the rate of about 100000 tons per year. In 2022, the production capacity may jump to the third place in the industry, but there is still room for improvement. In terms of marketing, the company increases advertising and expects to adjust product prices in 2022.
Investment suggestion: it is estimated that the company's EPS from 2021 to 2023 will be 0.62 yuan, 0.83 yuan and 1.03 yuan respectively, and the current price earnings ratio of the stock price will be 27 times, 20 times and 16 times respectively. The company will be given a "buy" rating for the first time.
Risk tips: rising raw material prices, devaluation of RMB, production capacity not meeting expectations, poor sales of new products.
