\u3000\u3 China Vanke Co.Ltd(000002) 078 Shandong Sun Paper Co.Ltd(002078) )
In the 21st year, the total production capacity exceeded 10 million tons, and the orderly launch drove the growth of performance. In 2021, the company realized an operating revenue of 31.997 billion yuan, a year-on-year increase of 48.21%, and a net profit attributable to the parent company of 2.957 billion yuan, a year-on-year increase of 51.39%, which was mainly driven by the release of new production capacity such as the company’s carton board (800000 tons of Laos carton board paper were put into operation at the beginning of 20q3-21), cultural paper (550000 tons of 21h2 Guangxi project were put into operation), chemical pulp (800000 tons of 21h2 Guangxi project were put into operation) and the increase of production and sales of related products. At present, the company’s self-sufficiency rate of wood pulp has exceeded 50%, ranking in the forefront of the industry. In the future, with the continuous improvement of the company’s integrated layout of Forest Pulp and paper, the self-sufficiency rate of raw materials is expected to be further improved.
Pulp based paper: the profit of cultural paper is at the bottom. It is expected that the profit of the company’s cultural paper business is expected to gradually recover in 22 years. In 2021, the company’s cultural paper achieved an operating revenue of 8.671 billion yuan, a year-on-year increase of 20.29%, and the gross profit margin of cultural paper was 15.96%, a year-on-year decrease of 6.54 PCT. The profit of cultural paper fluctuated greatly throughout the year. Since 21h2, the import of overseas paper products increased and the export of Chinese paper products decreased. Under the influence of import and export, the supply of Chinese market increased rapidly, the high price of paper fell, and the profit of 21q4 pulp paper fell to the bottom of the cycle. At the beginning of the year, with the recovery of overseas demand and the reduction of the number of imported paper, large-scale paper mills successively issued price increase letters, and the price of cultural paper has increased smoothly by Shenzhen Jt Automation Equipment Co.Ltd(300400) yuan / ton since the end of February. In the follow-up, we believe that the low profit point of the company’s cultural paper has passed. With the gradual return of the domestic and foreign demand side to normal, the delay in the production of overseas pulp plants at the raw material side and the continued tension in transportation capacity, it is expected that the price of wood pulp will continue to be high, and the recent energy price has dropped. The company is expected to ease the cost pressure to a certain extent under the support of the raw material self-sufficiency rate + moderate price transmission, and the ton profit is expected to be repaired quarterly.
Waste paper: the supply and demand pattern of box board paper is good in the medium term, and the company’s production capacity and raw material layout in the field of high-grade packaging paper support profits. In 2021, the company achieved an operating revenue of 9.87 billion yuan, a year-on-year increase of 136.59%, and the gross profit margin of 15.43%, a slight decrease of 0.93 PCT. Under the guidance of the national “waste prohibition order”, we have officially entered the era of “no external waste”. The shortage of high-quality fiber has led to obvious differentiation in the price of box board paper, and the price of high-grade box board paper with high-quality fiber as raw material has risen. In the 21st year, the company benefited from the smooth production of high-grade packaging paper in Laos, driving the continuous expansion of the scale. In terms of raw material layout, the company has about 700000 tons of new fiber to replace waste paper in China and 400000 tons of American waste pulp board processing capacity in Laos, which largely offset its dependence on imported and domestic waste paper.
The production capacity continues to be distributed, and the integration of Forest Pulp and paper will help the future growth. The three bases in Shandong, Guangxi and Laos built by the company have formed a “Forest Pulp paper integration” system with Shandong Sun Paper Co.Ltd(002078) characteristics, and the production capacity layout continues to promote, driving the scale expansion: 1) after years of development, the Laos base has formed a production capacity of 1.5 million tons of pulp paper and a planting forest scale of more than 50000 hectares, realizing a planting plan of 10000 hectares / year in the short term, and continuously improving the self-sufficiency rate of raw materials. 2) The 3.5 million ton Forest Pulp and paper project of Guangxi project has been put into operation successively, and the production capacity of 550000 tons of cultural paper + 800000 tons of chemical pulp + 200000 tons of chemical mechanical pulp in 21q4 phase I and phase II has been put into operation. 3) Nanning project: a strategic cooperation framework agreement was signed with Nanning government in February 22 to agree on investment and construction “Forest Pulp paper integration and supporting industrial park project with an annual output of 5.25 million tons; completed the wholly-owned acquisition of Guangxi liujingcheng with an investment of 1.5 billion yuan in March 22, with a production capacity of 150000 tons of pulp and 200000 tons of paper, marking the official launch of the company’s Nanning project. Relying on the rich forestry resources in Guangxi, the agreement is expected to continue to deepen the layout of the company’s base in Guangxi and consolidate its leading position in papermaking.
Profit forecast and investment rating: we are optimistic about the quarterly improvement trend of the company’s profits. In the future, continuous production capacity will drive the expansion of scale, the rapid integration of Forest Pulp and paper, and the increase of the proportion of self supplied pulp is expected to further strengthen the cost advantage. We estimate that the net profit attributable to the parent company from 2022 to 2024 will be 3.05 billion yuan, 3.24 billion yuan and 3.53 billion yuan respectively, with a year-on-year increase of 3.13%, 6.3% and 8.93% respectively. The current share price (2022 / 4 / 20) corresponds to a 22-year PE of 10.6x and a Pb of 1.5x. Taking into account the company’s leading position in the integrated layout of forest, pulp and paper in the paper industry, excellent profit quality and corporate governance level, the company is given a “buy” rating for the first time.
Risk factors: the risk of intensified industry competition and the risk of price fluctuation of raw materials.
