\u3000\u3 China Vanke Co.Ltd(000002) 078 Shandong Sun Paper Co.Ltd(002078) )
Event overview
Shandong Sun Paper Co.Ltd(002078) released the annual report of 2021. In 2021, the company achieved a revenue of 31.997 billion yuan, a year-on-year increase of 53.37%; The net profit attributable to the parent company was 2.957 billion yuan, a year-on-year increase of 51.39%; The net profit after deducting non-profit was 2.932 billion yuan, a year-on-year increase of 52.44%. In terms of cash flow, the net cash flow from operating activities was 4.929 billion yuan, a decrease of 25.49% over the same period last year, mainly because the cash paid for purchasing goods and receiving labor services in the current period increased over the same period last year and was greater than the cash received from selling goods. Quarter by quarter, the company achieved revenue of 76.43, 81.70, 7.902 and 8.282 billion yuan respectively in Q1, Q2, Q3 and Q4 in 2021, with a year-on-year increase of 37.66%, 67.55%, 51.65% and 39.19%; The net profit attributable to the parent company was RMB 1108 million, RMB 1124 million, RMB 537 million and RMB 189 million respectively, with a year-on-year increase of 106.71%, 180.56%, 20.43% and – 66.98%. The company’s performance meets our expectations. Analysis and judgment:
Revenue side: release of new production capacity and substantial growth of revenue
The release of the company’s new production capacity has led to an increase in product sales and an increase in sales revenue. During the reporting period, the company produced and sold 5.36/5.23 million tons of paper products, with a year-on-year increase of 39.22% / 37.63%. A total of 1.13/1.07 million tons of pulp were produced and sold, with a year-on-year increase of 26.97% / 10.31%. In terms of products, the company’s uncoated cultural paper, coated paper, electricity and steam, chemical mechanical pulp, dissolved pulp, household paper, coated base paper and kraft liner paper achieved revenue of 8.671 billion yuan, 4.099 billion yuan, 10.72 billion yuan, 18.27 billion yuan, 32.55 billion yuan, 857 billion yuan, 1.610 billion yuan and 9.870 billion yuan respectively, with a year-on-year increase of 20.29%, 16.8%, 34.85%, 2.25%, 49.46%, 9.01%, 94.98% and 136.59% respectively. With the successful trial production of the paper and pulp project in Beihai Park of the company’s Guangxi base, the strategic pattern of Shandong Sun Paper Co.Ltd(002078) “three bases” has been basically formed, and the company’s comprehensive strength has reached a new level.
Profit side: the annual expense rate has declined
In terms of cost, the company’s overall gross profit margin was 17.37%, a year-on-year decrease of 2.07pct, mainly due to the large price fluctuation of bulk materials in this period. By industry, the gross profit margin of the company’s pulp and paper products was 17.23%, down 1.6pct year-on-year. The gross profit margin of electricity and steam was 17.96%, down 13.03pct year-on-year. In terms of expenses, the company’s period expense rate in 2021 was 6.42%, a year-on-year decrease of 1.46pct. Among them, the rates of sales / management / financial expenses were 0.43% / 2.54% / 1.77% respectively, with a year-on-year decrease of 0.05/0.48/0.70pct. The company’s R & D expense ratio fell 0.22pct to 1.68% year-on-year. In a single quarter, the gross profit margin of Q4 company was 9.90% in 2021, up 0.69pct year-on-year and down 4.52pct month on month. The net interest rate was 2.29%, down 7.36 PCT year-on-year and 4.54 PCT month on month.
Other important financial indicators
At the end of 2021, the company held 3.468 billion yuan of monetary capital, a year-on-year increase of 16.77%. The company’s cash inflow from investment activities decreased by 63.16% compared with the same period last year, mainly due to the decrease of cash received from investment activities in the current period compared with the same period last year. The net cash flow from the company’s financing activities increased by 823.02% over the same period last year, mainly due to the increase in cash inflow due to the increase in borrowings received from financing activities. At the same time, the cash paid for debt repayment in financing activities decreased year-on-year, resulting in an increase in the net cash flow of financing activities.
Forest Pulp paper integration, sustainable development
On March 1, 2022, Nanning Shandong Sun Paper Co.Ltd(002078) Co., Ltd., a wholly-owned subsidiary of the company, completed the handover of the acquisition of the assets of Guangxi Liujing Chengquan Investment Co., Ltd. this equity acquisition is the largest equity acquisition since the company started its business, marking the official launch of the “Forest Pulp Paper integration” project in Nanning Park of the company’s Guangxi base. According to the strategic cooperation framework agreement signed between the company and Nanning Municipal People’s Government of Guangxi Zhuang Autonomous Region, the company will invest in the construction of “5.25 million tons of Forest Pulp paper integration and supporting industrial park project” in Nanning through Nanning Shandong Sun Paper Co.Ltd(002078) Co., Ltd. The coordinated promotion of Beihai and Nanning dual parks in Guangxi base is an important hub for the sustainable and stable development of enterprises. Connecting the sun’s Shandong base and Laos base at the most appropriate time and place has realized the mutual integration, complementarity and coordinated development of Shandong Sun Paper Co.Ltd(002078) “three bases”, which has laid a solid foundation for the stable and healthy operation of Shandong Sun Paper Co.Ltd(002078) in the medium and long term.
Investment advice
We believe that the continuous launch of the company’s own wood pulp production capacity can effectively reduce the pulp cost of the company’s paper products, while the rebound in the price of cultural paper and the launch of the company’s new production capacity can also increase the company’s revenue, and the company’s profitability is expected to continue to improve month on month. We keep the profit forecast for 2022 and 2023 unchanged. The company’s revenue in 22-23 years is 36.375/38.523 billion yuan and EPS is 1.20/1.27 yuan. It is expected that the company will achieve revenue of 41.669 billion yuan and EPS is 1.37 yuan in 2024. Corresponding to the closing price of 11.99 yuan / share on April 15, 2022, PE is 9.96/9.42/8.75 times respectively, maintaining the “buy” rating of the company.
Risk tips
1) the demand for cultural paper fell sharply. 2) Too much new capacity in the industry has led to a decline in the price of the company’s products.
