Shanghai Zijiang Enterprise Group Co.Ltd(600210) (600210)
Main points:
Why are we optimistic about Shanghai Zijiang Enterprise Group Co.Ltd(600210) ?
The company is a leading enterprise in China’s packaging industry and a leader in the plastic packaging industry. It deeply cultivates the packaging field, takes beverage packaging as the core, and the industrial cluster continues to expand. The company is the first Chinese packaging enterprise to layout the aluminum-plastic film business. Referring to Japan and South Korea, most of the aluminum-plastic film leaders have developed and expanded from the same industrial background, Shanghai Zijiang Enterprise Group Co.Ltd(600210) has strong advantages in the R & D of aluminum-plastic film products, raw material production and other fields. At present, the company’s aluminum-plastic film products have reached or approached the level of Japanese peers in key indicators such as electrolyte corrosion resistance, punching depth, insulation and heat sealing stability. In the future, the aluminum-plastic film business is expected to grow by relying on the popularization of new consumer electronics products in the downstream terminal field, soft packaged power batteries for new energy and energy storage batteries. We believe that with the continuous upgrading of the company’s products and the acceleration of the localization and substitution process of aluminum-plastic film for power battery, the company’s performance is expected to maintain rapid growth.
The company’s traditional packaging business maintains its advantages, the profit stability is improved, and the market share is expected to expand.
The company’s packaging industry includes beverage packaging, soft packaging and new materials business. It has comprehensive competitive advantages in many aspects, such as high-quality customer resources, industrial chain, production and sales network layout, process technology, professionals and so on. During the epidemic period, the company still reached cooperation with blue moon, Unilever, Mengniu and other enterprises, further increasing the market share of the packaging industry. In addition, the company served epidemic prevention materials during the epidemic, and took this opportunity to obtain medical strategic customers, with a sharp increase in sales. In the field of plastic packaging, the company is in the first echelon with strong competitiveness. In 2020, the production and marketing rate of the company’s main products will remain above 97%. The sustainable development of the beverage industry in the future determines that the current and long-term market capacity of the beverage packaging industry will also continue to grow, providing an important driving force and basic guarantee for the development of the company. With the restructuring of downstream products and the continuous introduction of new products, the demand for packaging is also upgrading. With the company’s comprehensive advantages, the market share of traditional packaging business is expected to continue to expand.
The aluminum-plastic film business grew rapidly and became the second growth curve.
The company is the first enterprise in China to enter the aluminum-plastic film industry by relying on independent research and development. Now it has successfully developed the fourth generation aluminum-plastic film using environmental protection technology, realized mass production and sales, and achieved application in all fields. At present, the company has realized continuous batch cooperation with more than half of the customers in the top ten battery factories of digital category. In 2020, the annual sales volume will be + 37% year-on-year, and in 2021h1, the sales volume will be + 88% year-on-year. Among them, the sales volume of power aluminum-plastic film will be 5.09 million square meters, with a year-on-year increase of + 310%, and the proportion of power products will rise to 48%. In the future, with the expansion of the demand for soft pack batteries and the acceleration of the localization and substitution process of aluminum-plastic film, the aluminum-plastic film business will become a new growth point of the company’s performance.
Investment suggestions:
We are optimistic about Shanghai Zijiang Enterprise Group Co.Ltd(600210) . As a leader in China’s packaging material printing industry, the company has always been an excellent supplier to many well-known enterprises at home and abroad, such as Coca Cola, Pepsi Cola and Unilever, and its roe has remained above 10% in the past two years. The company began to set up an aluminum-plastic film team in 2004 and updated to the fourth generation in 17 years. It is the first enterprise in China to develop aluminum-plastic film process and have mass production capacity. Its development process is also the closest to Japan and South Korea aluminum-plastic film enterprises, and has the conditions to become the leader of domestic aluminum-plastic film. Benefiting from the domestic substitution and the rapid development of the downstream new energy vehicle industry, combined with the release of the company’s new production capacity, the performance is expected to continue to grow rapidly. We expect that the company’s revenue in 2021, 2022 and 2023 will be RMB 9.167/103.69/12.247 billion respectively, EPS will be RMB 0.42/0.51/0.63 respectively, corresponding to the closing price of RMB 9.1/share on November 30, and PE will be 22.32/18.14/14.66x respectively. For the first time, we are optimistic about the application of the company’s aluminum-plastic film in the field of new energy vehicles, Shanghai Zijiang Enterprise Group Co.Ltd(600210) as a leading company of domestic aluminum-plastic film, we have determined to benefit and given a “buy” rating.
Risk statement
1) Macroeconomic fluctuations lead to lower downstream demand than expected; 2) The change of raw material price leads to the decline of the company’s profitability; 3) The development of emerging business is less than expected.
