\u3000\u3 China Vanke Co.Ltd(000002) 078 Shandong Sun Paper Co.Ltd(002078) )
Event:
The company released the annual report of 2021, and the company achieved revenue / net profit attributable to the parent company of RMB 32 / 2957 million respectively, with a year-on-year increase of + 48.2% / + 51.4% respectively; In 2021q4, the revenue / net profit attributable to the parent company were 8.28 billion yuan and 188 million yuan respectively, with a year-on-year increase of + 39.2% / - 67% respectively.
Comments:
The performance of 4q2021 is the lowest in the whole year. It is expected that the performance of 1q2022 is expected to increase significantly month on month: in 2021, the company will realize the sales volume of 5.23 million tons of paper products and 1.07 million tons of pulp, with a year-on-year increase of + 37.6% / 10.3% respectively. Driven by the rise of average product price, the company's revenue and profit will achieve good growth. In terms of products, the revenue of uncoated cultural paper / coated paper / box board paper / coated base paper / dissolved pulp was 86.7/41/98.7/16/3.26 billion yuan respectively, with a year-on-year increase of + 20.3% / 16.8% / 136.6% / 95% / 49.5% respectively.
In 4q2021, the gross profit margin of the company was 9.9%, 4.5pcts lower than that of 3q. Looking at the change of paper price alone, 4q2021 paper price was in the transition period from decline to stabilization and recovery, and the change of 4q paper price was not obvious compared with 3Q. However, according to wind data, the price of thermal coal (q5800, Shanxi) increased from 977 yuan / ton of 3q average price to 1541 yuan / ton of 4q average price. The sharp rise of energy cost led to a sharp rise in papermaking cost. According to Zhuo Chuang consulting, in 1q2022, the average price of Chinese double offset paper / coated paper / box board paper was 5880 / 5481 / 4883 yuan / ton respectively, compared with 4q2021, and + 366 / + 120 / - 280 yuan / ton respectively. At the same time, the average price of 1q2022 thermal coal (q5800, Shanxi) decreased to 812 yuan / ton month on month. The rise of paper price and the reduction of energy cost are expected to drive the recovery of 1q2022 boom. In addition, at the company level, benefiting from the production of 800000 tons of chemical pulp and 200000 tons of chemical mechanical pulp in 4q2022 Beihai project, we expect that 1q2022 will significantly improve the company's performance compared with 4q2021.
The decline of paper price and the rise of energy cost put pressure on the gross profit margin, and the expense rate decreased due to the scale effect: in 2021, the gross profit margin of the company was 17.4%, year-on-year -2pcts. By product, the gross profit margin of double offset paper / coated paper / box board paper / coated base paper / dissolved pulp was 16% / 19.7% / 15.4% / 22.3% / 23% respectively, with a year-on-year increase of - 6.5 / - 5.7 / - 0.9 / - 4.4 / + 26.5pcts. Although the gross profit margin of dissolved pulp was significantly improved, the decline of paper price and the rise of energy cost in the second half of the year put pressure on the company's comprehensive gross profit margin.
In terms of period expense rate, it was 6.4% in 2021, with a year-on-year rate of - 1.5pcts. Among them, the rates of sales, management, R & D and financial expenses were 0.4% / 2.5% / 1.7% / 1.8% respectively, with a year-on-year rate of - 0.1 / - 0.5 / - 0.2 / - 0.7pcts. We believe that good cost control ability and scale effect drive the company's period expense rate down year-on-year.
Rational regional layout and improvement of self-sufficiency rate in upstream links to enhance the company's core competitiveness: at present, Shandong Sun Paper Co.Ltd(002078) has completed industrial layout in Shandong, Guangxi and Laos. In particular, China's development focus has shifted to Guangxi, which is rich in forest resources and relatively cheap in energy consumption, land and labor. In the process of completing the regional layout, the company also actively layout the upstream forest and pulp resources. According to the announcement publicly disclosed by the company and our tracking statistics, at present, the company has formed approximately 1.8 million tons of double offset paper, 1 million tons of coated paper, 2.4 million tons of box board paper and 300000 tons of household paper, that is, a total capacity of 3.1 million tons of wood pulp paper and 2.4 million tons of waste paper box board paper; In terms of pulp resources, 1.4 million tons of chemical mechanical pulp and 900000 tons of chemical pulp have been formed to provide raw materials for wood pulp paper products; 200000 tons of natural color pulp, 100000 tons of sawdust pulp, 400000 tons of semi chemical pulp and 400000 tons of waste pulp provide raw material support for high-end Kraft linerboard in the headquarters and Laos. At the same time, the company also has a production capacity of 800000 tons of dissolved pulp. The rational layout of the region and the improvement of the self-sufficiency rate of the upstream wood pulp link enhance the core competitiveness of the company.
The boom of the industry is expected to reach the bottom and recover, waiting for the effect of China's steady growth policy to be revealed: since the price increase letters of paper prices have been issued continuously after the year, we believe that the boom of China's paper industry has completed the bottom building action in 4q2021. However, objectively speaking, the rise of bulk paper prices is a forced price increase of upstream wood pulp, and the boom recovery of China's paper industry is still weak, We predict that the performance of Shandong Sun Paper Co.Ltd(002078) 1q2022 will improve significantly month on month, mainly due to the company's own production of 1 million tons of wood pulp in 4q2021. If the subsequent boom of the industry wants to usher in a greater recovery, it needs to rely on China's steady growth policy to show the effect and drive the macroeconomic upward.
Fundamentals are expected to usher in an inflection point in 1q2022. Pb is lower than the historical average and raised to the "buy" rating: we expect the company's EPS from 2022 to 2024 to be 1.07/1.37/1.42 yuan respectively, and the corresponding PE of the current stock price is 11 / 9 / 8 times respectively. According to wind data, from 2017 to now, Shandong Sun Paper Co.Ltd(002078) historical Pb (MRQ) average is 1.99 times, and the current Pb (MRQ) of the company is 1.72 times, which is lower than the historical average. The company's fundamentals are expected to usher in an inflection point in 1q2022. At the same time, with the effect of the follow-up national steady growth policy, the macroeconomic rise will drive the prosperity of the whole paper sector to pick up. We raised the company's rating to "buy".
Risk tip: China's macro-economy is lower than expected, and the prices of wood pulp and thermal coal are higher than expected.
