\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 567 Shanying International Holdings Co.Ltd(600567) )
Event:
The company released the annual report of 2021, and the company realized revenue / net profit attributable to the parent company of 33.03/1.52 billion yuan respectively, with a year-on-year increase of + 32.3% / + 9.7% respectively; In 2021q4, the revenue / net profit attributable to the parent company were RMB 8.98/209 billion respectively, with a year-on-year increase of + 13.2% / – 47.5% respectively. In 2021, the company realized a net operating cash flow of 1.97 billion yuan, a year-on-year increase of + 68.2%.
Comments:
Weak macro-economy and rising energy and transportation costs made the performance lower than expected: in 2021, according to products, the revenue of box board paper / corrugated paper / other base paper / packaging was 136 / 41.6/34.5/7.3 billion yuan respectively, with a year-on-year increase of + 2.9% / 84.2% / 26.8% / 50% respectively. In 2021, the company achieved a sales volume of 5.82 million tons of paper products, compared with 5.153 million tons in 2020, a year-on-year increase of + 12.9%; Packaging sales reached 20.24 billion square meters, a year-on-year increase of + 35.2%.
According to Zhuo Chuang information, 1q / 2q / 3Q / 4q2021, the average price of carton board paper is 4689 / 4630 / 4800 / 5164 yuan / ton respectively, and the average price of yellow board waste paper is 2288 / 2223 / 2391 / 2432 yuan / ton respectively. The price of carton board paper basically keeps pace with the trend of national waste price, and even the price of 4q2021 paper increases more than that of waste paper. However, due to the rising energy and transportation costs, weak macroeconomic trend and weak profitability in the second half of the year, As a result, the annual net profit attributable to the parent company was lower than the market expectation.
The gross profit margin was -4.5pcts year-on-year, and the period expense rate was -1.2pcts year-on-year: in 2021, the company’s gross profit margin was 12.2%, year-on-year -4.5pcts. In terms of products, the gross profit margin of box board paper / corrugated paper / other base paper / packaging was 13.5% / 17% / 16.9% / 10% respectively, with a year-on-year increase of – 6 / + 1.6 / – 7.8 / – 0.3pcts. In terms of period expense rate, it was 9.9% in 2021, with a year-on-year increase of – 1.2pcts. Among them, the rates of sales, management, R & D and financial expenses were 1.1% / 4.1% / 2.6% / 2.1% respectively, with a year-on-year increase of – 0.3 / – 0.4 / + 0.5 / – 1.0pcts. We believe that the decrease of sales and management expense rate is due to the company’s good cost control ability. The increase of R & D expense rate stems from the company’s increasing investment in R & D, trying to get rid of the cyclical attribute at the company level and enhance its growth ability. The significant decrease in the financial expense rate was due to the increase in exchange earnings.
Import and export have improved, but domestic demand has not yet improved, which will continue to exert pressure on 1q2022 performance growth: from January to February this year, due to the high price of American waste, the cost of overseas box board corrugated paper making is higher than that in China, and the import and export situation of box board corrugated paper in China has improved. According to customs data, from January to February, China’s total net import of box board paper and corrugated paper was 860000 tons, a decrease of 195000 tons compared with the same period last year. In 2021, China’s net import of box board corrugated paper was 6.88 million tons. We believe that the decrease in net import will help boost the supply-demand relationship of box board corrugated paper in China. However, at present, domestic demand is still weak, and there are insufficient orders in the downstream packaging industry, superimposing the epidemic situation from March to April, The prosperity of China’s box board corrugated paper industry is still suppressed. 1q2022, the average price of China’s box board paper / corrugated paper was 4884 / 3857 yuan / ton respectively, down 280 / 394 yuan / ton respectively compared with 4q2021. We believe that after the closure and control of the epidemic, China’s box board corrugated paper industry will be repaired with the recovery of China’s logistics and e-commerce, but in essence, it still depends on the upward trend of macro economy.
The fundamentals are at the bottom stage, Pb is at a ten-year low, industrial capital is repurchased, and a “buy” rating is given: we expect the company’s EPS to be 0.38/0.51/0.50 yuan from 2022 to 2024, and the corresponding PE of the current stock price is 8 / 6 / 6 times respectively. According to wind data, since 2012, the average value of Pb (MRQ) has been 1.33 times, the lowest historical Pb (MRQ) is 0.83 times, and the current Pb (MRQ) of the company is 0.85 times, which is close to the lowest value of Pb in the past 10 years. At the same time, according to the company’s incentive assessment plan, the controlling shareholders and senior executives will jointly invest about 284 million yuan to increase their holdings in the secondary market in the next 12 months. On March 18, the company announced that based on its confidence in the company’s future development prospects and recognition of the company’s value, the company plans to repurchase shares with its own funds and bond raised funds. The total amount of funds for this repurchase is not less than 250 million yuan and not more than 500 million yuan (including this amount).
Although we believe that 1q2022, the company’s fundamentals are still difficult to recover significantly, so far, the relevant parties of the company have announced that at least 534 million yuan has been repurchased. We believe that combined with the company’s valuation and the measures of large amount repurchases of industrial capital, the company’s fundamentals are at the bottom. Once the follow-up national steady growth policy shows its effect, the macroeconomic rise will drive the prosperity of the box board corrugated paper industry to pick up and cover it for the first time, We give the company a “buy” rating.
Risk tip: China’s macro-economy is lower than expected, and the prices of wood pulp and thermal coal are higher than expected.
