Industry perspective update:
Looking ahead to the performance of the first quarter report: in the home sector, although the growth of the bulk business of Q1 customized home enterprises and the export business of software home enterprises is expected to slow down due to objective factors, relying on the relatively ideal growth of the retail end, it is expected that the overall revenue growth of the head enterprises in the first quarter will not slow down significantly, In terms of profit, due to the rise of raw materials and the high base last year, the profit growth rate of Q1 sector is expected to be relatively slow than the revenue growth this year. In terms of papermaking, the pulp and paper department has ushered in a performance inflection point since Q1 due to the smooth implementation of the price increase letters of paper enterprises in February and March. In the pet sector, the revenue side is expected to grow steadily. Due to the recent high prices of raw materials fluff pulp and polymer sap, the short-term Tianjin Yiyi Hygiene Products Co.Ltd(001206) profit may be affected.
Home furnishing: this week, six ministries and commissions, including the CSRC, the CBRC, the central bank, the Ministry of finance, the financial commission and the administration of foreign exchange, actively expressed their support for the stability of real estate. In this context, the demand of the home sector is expected to improve, and the valuation of the sector needs to be repaired. From the fundamental point of view, the recent recurrence of the epidemic in China is only a short-term disturbance. Referring to the epidemic in 2020, the home demand will still lag and will not disappear. From the current grassroots research, the head enterprises have obvious advantages in 315 activities, showing the trend of accelerated concentration of the head. On the whole, under the trend of integrated sales of customization and software, the requirements for the comprehensive ability of brands and dealers will be higher, the competition threshold will be significantly improved, and the industry structure is expected to usher in marginal optimization. On the whole, we are still optimistic about Oppein Home Group Inc(603833) , Jason Furniture (Hangzhou) Co.Ltd(603816) and Suofeiya Home Collection Co.Ltd(002572) with significantly leading comprehensive ability, as well as the results of in-depth reform.
New type of tobacco: in terms of atomization, the national standard of e-cigarette has been updated from the comment stage to being approved. It is considered that the e-cigarette management measures will be implemented from May 1, and the national standard is expected to take effect before May. In the long run, on the one hand, the legalization of e-cigarette identity is conducive to solve consumers’ concerns about product safety, on the other hand, it can make the positioning of e-cigarette target customers more clear, and promote the sustainable and healthy development of the industry as a whole. After the new regulations, if various brands gradually improve the taste and product power of tobacco, based on the harm reduction effect, its long-term growth space is still worth looking forward to. In the future, the entry threshold of the industry will be raised, which will also make the stickiness between brands and manufacturers stronger, and the pattern of manufacturers is expected to be greatly optimized. In addition, the export policy is still relatively loose. On the whole, SIMORE’s short-term performance may be subject to fluctuations in the Chinese market, but the certainty of long-term growth is improving. Under the current valuation level, the value of long-term layout is prominent.
Papermaking: the high pulp price supports the cost driven price rise of paper enterprises. It is suggested to pay attention to special paper targets with a better pattern and pulp leaders with high self supply rate of raw materials and expected quarterly improvement of net profit per ton. 1) Operating angle: under the pressure of high cost, the recovery rhythm of operating rate of various paper enterprises slowed down. This week, the operating rates of coated paper and double offset paper were + 0.26%, + 0.66% and – 0.08% month on month; 2) Inventory angle: the inventory days of coated paper and double offset paper are + 0.21% and + 0.38% respectively, the inventory of white cardboard is + 0.28%, and the inventory of box board corrugated paper is + 0.21% and 0.26% respectively; The academic flood season has driven the marginal recovery of demand for cultural paper + the weakening of pressure at the import end and the strong performance at the export end, which has promoted the improvement of supply and demand pattern. In addition, under supply constraints, it is expected that the price of wood pulp in the first half of the year is expected to remain high and fluctuate, which also supports the smooth implementation of price increase of paper enterprises, but the excess transfer of follow-up costs still depends on the prosperity of downstream demand.
Investment advice
Home furnishing: recommend Oppein Home Group Inc(603833) (Integrated Business & platform), Jason Furniture (Hangzhou) Co.Ltd(603816) (domestic share concentration & export profit elasticity), Suofeiya Home Collection Co.Ltd(002572) (it is improving in many aspects, and there is a large space for valuation repair).
Papermaking: it is suggested to pay attention to Shandong Sun Paper Co.Ltd(002078) , repair the fundamentals quarterly from 1q, pick up the demand of cultural paper in the peak season, replenish the stock & under the background of low profit, the price increase of the paper mill in March has been successfully implemented, and the net profit per ton has recovered to about 300 yuan. At the cost end, when 800000 tons of chemical pulp are put into operation in Guangxi, the high price of external pulp has a limited impact on the cost end; The medium-term release of 5.25 million tons of production capacity supports the growth logic.
Risk factors
The extent and duration of the slowdown in China’s consumption growth exceeded expectations; Real estate sales have been shrinking sharply for a long time; The price of raw materials rose faster and longer than expected; The exchange rate fluctuated sharply.
