\u3000\u30 Shenzhen Guohua Network Security Technology Co.Ltd(000004) 88 Shandong Chenming Paper Holdings Limited(000488) )
Event:
The company released the annual report of 2021: the annual revenue of 2021 was 33.02 billion yuan, a year-on-year increase of 7.43%; The net profit attributable to the parent company was RMB 2.066 billion, a year-on-year increase of RMB 2.066 billion; The net profit deducted from non parent company was 1.744 billion yuan, with a year-on-year increase of 55.83%; The basic earnings per share is 0.56 yuan.
Guoyuan view:
The fluctuation of paper price put pressure on the performance in the second half of the year, and the scale of financial leasing continued to shrink
In 2021, the company produced 5.5 million tons of machine-made paper (- 4.68%), sold 5.45 million tons (- 2.85%), and achieved a revenue of 33.02 billion yuan (+ 7.43%) and a net profit attributable to the parent company of 2.066 billion yuan (+ 20.65%). Quarter by quarter, q1-4 company achieved revenue of RMB 10.206/69.67/85.89/7.258 billion respectively, a year-on-year increase of + 67.71% / – 7.28% / + 1.36% / – 16.22%; The net profit attributable to the parent company was 1.179/8.42/1.61/ – 117 billion yuan, a year-on-year increase of + 481.42% / + 168.56% / – 71.22% / – 118.38%, and a month on month increase of + 85.54% / – 28.59% / – 80.85% / – 172.45%, which was affected by the periodic fluctuation of paper price. From the perspective of papermaking business, the revenue of white cardboard / double offset paper / coated paper / anti stick base paper was 95.80/72.87/43.111168 billion yuan, with a year-on-year increase of 21.25% / 5.91% / 4.26% / 4.42%, and the revenue of electrostatic paper decreased by 4.82% to 3.857 billion yuan. In addition, the company continued to reduce the scale of financial leasing business, achieved revenue of 327 million yuan (- 65.03%), accounting for 0.99% of total revenue (- 2.05pcts), and net recovery of 1.153 billion yuan.
The profitability remained stable and the expense rate continued to be optimized
In 2021, although the paper price fluctuated sharply throughout the year, combined with the weakening demand in the second half of the year and the marginal increase of cost pressure, the overall profitability of the company remained stable. The comprehensive gross profit margin of the company increased by 0.54pcts to 23.61% year-on-year and the net profit margin increased by 0.13pcts to 6.33%. By quarter, the gross profit margin of q1-4 was 29.08% / 33.64% / 15.25% / 16.20% respectively, with a year-on-year increase of + 0.84pcts / + 11.07pcts / – 8.91pcts / – 2.61pcts. By product, the gross profit margin of white cardboard / double offset paper / coated paper / electrostatic paper was 31.72% / 17.60% / 27.38% / 18.57% respectively, with a year-on-year increase of + 4.68pcts / – 0.16pcts / + 6.07pcts / – 2.56pcts. In terms of expense rate during the period, the sales expense rate / management expense rate decreased by 0.08pcts/0.48pcts to 0.89% / 2.85% year-on-year, and the R & D expense rate increased by 0.26pcts to 4.40% year-on-year. Significant results have been achieved in reducing the scale of financial leasing. The proportion of interest expenses in total revenue has decreased by 2.15pcts to 8.02% year-on-year, and the financial expense ratio has decreased by 1.11pcts to 7.23% year-on-year. The company is expected to continue to optimize financial expenses by optimizing financing channels. By the end of 2021, the book balance of finance lease payments was 8.344 billion yuan, and the company’s liabilities decreased by – 8.33% year-on-year.
The pulp and paper integration strategy has been continuously promoted, and the new production capacity supports the long-term growth of performance
The company’s business strategy of reducing financial leasing business has been steadily promoted, focusing on the main industry of papermaking. The company accelerates the integration strategy of pulp and paper, continuously improves the self-sufficiency rate of wood pulp, so as to strengthen the cost advantage, and its cycle attribute may be gradually weakened. By the end of 2021, the company’s wood pulp / machine-made paper production capacity has reached 4.3/6.8 million tons. The construction of Huanggang Chenming phase II project has been started. After completion, it is expected to add 1.5 million tons of paper production capacity and 520000 tons of mechanical pulp production capacity, which will consolidate the leading position of the company’s pulp paper. Under the background of production restriction, the supply contraction will accelerate the destocking. The mismatch between supply and demand will drive the recovery trend of medium and short-term paper prices in the future. The superimposed company’s capacity will be further released, and the ton profit level is expected to improve month on month.
Investment advice and profit forecast
We believe that with the continuous reduction of the company’s financial leasing business scale and the optimization of capital structure, as the leader of pulp and paper integration, the pace of capacity expansion is clear, and the medium and long-term market share is expected to increase steadily. We adjusted the profit forecast. It is expected that the company will achieve revenue of 35.892/38.318/41.265 billion yuan, net profit attributable to the parent company of 2.237/24.73/2.855 billion yuan, EPS of 0.75/0.83/0.96 yuan and corresponding PE of 8.8/8.0/6.9 times from 2022 to 2024 respectively, maintaining the “overweight” rating.
Risk tips
The price of raw materials fluctuates greatly; Demand growth is less than expected; The progress of new capacity launch was less than expected.
