\u3000\u3 China Vanke Co.Ltd(000002) 078 Shandong Sun Paper Co.Ltd(002078) )
Key investment points
The performance in 2021 is in line with market expectations. The company achieved an operating revenue of 31.997 billion yuan in 2021, a year-on-year increase of + 48.21%; The net profit attributable to the parent company was 2.957 billion yuan, a year-on-year increase of + 51%; The net profit attributable to the parent company after non deduction was 2.932 billion yuan, a year-on-year increase of + 52.44%, and the performance was in line with market expectations.
2021q4 the profit side is under pressure under the disturbance of the cost side. By quarter, the net profit attributable to the parent company in 2021q1 / Q2 / Q3 / Q4 was 11.08/11.24/5.37/189 million yuan respectively, with a year-on-year increase of + 106.71% / + 180.56% / + 20.43% / - 0.67% respectively. The decline in profits in 2021q4 was mainly due to: 1) weak terminal demand, blocked price increase, intensified double reduction policy and weak demand for cultural paper; 2) High energy costs; 3) The rise in sea freight has led to the rise in the price of waste raw materials in the United States of Laos base and weakened the cost advantage.
The supply and demand pattern of cultural paper has improved, and the profit has entered the repair channel. In terms of products, the gross profit margins of uncoated cultural paper, coated paper, electricity and steam, chemical mechanical pulp, dissolved pulp, household paper, coated base paper and box board paper in 2021 were -6.54p, -5.68pp, -13.03pp, + 0.72pp, + 26.5pp, -18.62pp, -4.43pp and -0.93pp respectively. From January to April 2022, the cost support brought by the high level of wood pulp and the improvement of the supply and demand pattern brought by the increase in the demand for cultural paper under the new regulations of teaching materials and teaching aids were double driven. The price increase of cultural paper was relatively smooth. As of April 15, 2022, the average price of double offset paper was 6237.5 yuan / ton, an increase of 625 yuan / ton compared with December 31, 2021. The company's self supplied pulp accounts for 55-60%. In this round of price increase, the change direction of profitability is differentiated from the industry, the company's profitability is gradually repaired, and the industry continues to be under pressure. Since 2021q3, small and medium-sized paper enterprises have been near the breakeven line, while the new capacity of overseas pulp mills has been delayed or cancelled, the strike continues or the pulp price remains high, and the cost pressure of small and medium-sized paper enterprises has not been significantly relieved. Therefore, we judge that some small and medium-sized paper enterprises will be gradually cleared in the future, there are still opportunities for price increase under the optimization of industry supply and demand pattern, the company's profits have entered the repair channel, and the industry concentration is expected to increase.
The asset liability ratio and cash flow performed well, continued to expand production and optimize the integrated layout of Forest Pulp and paper. The company's asset liability ratio in 2021 was 55.98%, with a year-on-year increase of 1.26pp. In 2021, the company realized an operating cash flow of 4.929 billion yuan, a year-on-year increase of - 25.49%; The ratio of operating cash flow / net income from operating activities is 147.83%; Sales cash flow / operating income was 112.45%. In 2021, the company's Beihai base cultural paper, household paper and chemical mechanical pulp projects were put into operation, with a total pulp and paper production capacity of 10 million tons; In January 2021, the company disclosed the construction plan of Nanning base, and planned to build a forest pulp and paper integration project with an annual output of 5.25 million tons, make full use of the resource endowment of Guangxi, further improve the production capacity layout of Forest Pulp and paper integration, and lay a foundation for medium and long-term growth.
Profit forecast and investment rating: considering the impact of the epidemic, the profit forecast is slightly reduced. We expect the net profit attributable to the parent company in 20222023 to be 3.04/3.47 billion yuan respectively (the original forecast of 20222023 was 3.29/3.73 billion yuan), the net profit attributable to the parent company in 2024 is expected to be 3.81 billion yuan, and the corresponding pe11x and 9x in 20222023. The valuation is low and has a strong margin of safety, maintaining the "buy" rating.
Risk tip: energy and freight costs remain high, and downstream demand is lower than we expected.
