The profitability of the paper sector can be improved, which is currently recommended. The paper sector has been under great pressure from the cost of raw materials and energy since the third and fourth quarters of last year. Since this year, the price of coal has fallen. Although the pulp price has been intensively released in the price increase letters of upward paper mills, the overall profit margin is expected to improve month on month. Compared with special paper and bulk paper, the price increase of special paper is higher. From the rhythm of price increase, the sustainability of the downstream mass consumption demand of special paper is expected to be better under the boom.
The home sector is waiting for the real estate data to improve. At the beginning of the year, under the expectation of the “steady growth” policy, the valuation of the home sector experienced a wave of repair. At the current time point, the data of commencement, completion and sales of residential real estate from January to February are still poor, and the social finance data in February did not show any signs of improvement in the real estate end. We believe that under the guidance of “implementing policies for the city”, the data of real estate still needs to wait for improvement, and the demand side of home is obviously affected by the sales data of new houses, that is, it will still take time for the demand of the industry to improve. Under such circumstances, combined with the recent leading order receiving data, we believe that the leading performance is highly deterministic, and the furniture enterprises that underestimate the value can also layout in advance.
The OEM boom of sports shoes and clothing continued, and the liquidity risk was eliminated. In 2021, international sports brands will face many challenges: the global epidemic continues to disturb the demand and supply chain; From a regional perspective, since the Xinjiang cotton incident broke out in Greater China in March 2021, the sales of international brands in China have continued to decline. Under these unfavorable factors, major international sports brands still achieved good performance in 2021, mainly due to the continued boom of outdoor sports in Europe and America and the normalization of professional sports events and activities, which brought about a strong demand for sports shoes and clothing. We believe that the prosperity of international brands will contribute to the sustainability of OEM orders. The dual release of orders and production capacity of sports OEM leader in 2022 can be expected, superimposed with the elimination of liquidity risk in the near future, which can strengthen attention.
Recent key events: the measures for the administration of electronic cigarettes was issued on March 11, 2022.
We believe that: (1) the taste ban disturbs the market in the short term. The new regulations prohibit the sale of flavored e-cigarettes other than tobacco flavor. Considering that previously non tobacco flavor products may account for more than 90% of market sales, the taste ban will have a great impact on the market. (2) The market for tobacco is still broad. In the long run, the number of Chinese smokers exceeds 300 million, and the penetration rate of e-cigarettes is estimated to be only a low single digit, so there is still a large space to replace cigarettes. (3) China will strictly regulate or enhance industry concentration. In terms of investment suggestions, we pay attention to the export development of e-cigarettes and SIMORE international, the leading e-cigarette manufacturer benefiting from the increase in the share of overseas major customers; At the same time, pay attention to relevant enterprises that deeply layout HNB industrial chain.
Key recommendations:
[key recommendations] Joy Kie Corporation Limited(300994) , Huali Industrial Group Company Limited(300979) , Li Ning, Shenzhou International, Minhua holdings, Jason Furniture (Hangzhou) Co.Ltd(603816)
Risk tip: the macroeconomic downturn affects purchasing power, the epidemic development exceeds expectations, and policy risks.
