\u3000\u3 China Vanke Co.Ltd(000002) 191 Shenzhen Jinjia Group Co.Ltd(002191) )
Core view
Cigarette label: the leading cigarette label industry in China, and the dominant main industry has maintained steady growth. The company has been deeply engaged in the cigarette label industry for decades, leading the technology industry. In 2021, the company’s cigarette label revenue accounted for 45%, reaching 2.3 billion yuan, accounting for about 12% of the total national cigarette label revenue. The company has maintained long-term and stable cooperation with 80% of provincial tobacco companies in China. With the high-end development of the downstream cigarette market, the value of cigarette labels will continue to increase. The company will fully benefit from the upgrading of industry structure by virtue of technical advantages and stable customer relations, and the main industry of cigarette labels is expected to maintain a steady growth.
New type of tobacco: the implementation of regulation will accelerate industrial integration and is expected to continue to double in the next two years. The company is looking forward to the layout of the whole supply chain of emerging tobacco. In terms of atomized tobacco, it has the ability to provide “integrated” solution manufacturing. HNB has in-depth cooperation with China tobacco to carry out multi-dimensional cooperation such as technology research and development and category expansion. In 2021, the company’s new tobacco business achieved revenue of 191 million yuan, a year-on-year increase of 381%. Under the general trend of global tobacco harm reduction, the penetration rate of emerging tobacco has increased year by year. With the gradual implementation of China’s industrial supervision and the imminent integration of industrial norms, the company will benefit the leading enterprises with leading process technology and production and manufacturing capacity. The company’s first mover advantage in the whole industrial chain of new tobacco will also gradually appear, with large-scale performance, and will meet high-speed development in the next two years, It is estimated that the company’s new tobacco business revenue CAGR will reach 151% from 2021 to 2023, and the revenue scale will exceed 1 billion yuan by 2023.
Large packaging: high-end development has achieved remarkable results, reducing costs, increasing efficiency and increasing profits. The company continues to promote the production automation process of color box business, greatly improve the production efficiency, grasp the upgrading trend of medium and high-end tobacco and alcohol and 3C packaging, and has achieved remarkable results in the strategy of high-end products. The gross profit margin of color box has increased from 18.18% in 2017 to 38.5% in 2020. It is expected to maintain a high gross profit level in the future. In terms of new materials, the company applies laser paper film to cigarette and wine packaging, and actively develops the external market; Acquisition of Qingdao Innolux packaging force high-end film business. The continuous expansion of the new materials sector will further enhance the competitiveness of the company’s products and boost the profitability of the large packaging business.
Profit forecast and investment suggestions: as the leader of cigarette packaging, the company has built a solid performance base for the main business of cigarette label, and steadily promoted the upgrading and development of large packaging business. The company pays close attention to the development trend of new-type tobacco and comprehensively arranges all links of the new-type tobacco industry chain. It is expected to fully enjoy the development dividend of China’s new-type tobacco after the implementation of supervision by virtue of its first mover advantage. The net profit of “purchase” and “maintenance” is expected to be 1.2-1.2 times that of “1.2-1.2 billion yuan in 2021, respectively.
Risk tip: the supervision of the new tobacco industry exceeded expectations; Intensified market competition; The terminal demand is less than expected; Goodwill is high and there is a large impairment risk.
