\u3000\u3 China Vanke Co.Ltd(000002) 228 Xiamen Hexing Packaging Printing Co.Ltd(002228) )
Event overview
Xiamen Hexing Packaging Printing Co.Ltd(002228) released the annual report of 2021. In 2021, the company achieved a revenue of 17.549 billion yuan, a year-on-year increase of + 46.16%; The net profit attributable to the parent company was 218 million yuan, a year-on-year increase of – 24.73%. Quarterly, the revenues of Q1, Q2, Q3 and Q4 companies were 37.49, 44.65, 44.54 and 4.881 billion yuan respectively, with a year-on-year increase of + 94.13%, + 57.58%, + 34.71% and + 24.02% respectively; The net profit attributable to the parent company was 61 million yuan, 90 million yuan, 54 million yuan and 14 million yuan respectively, with a year-on-year increase of + 66.17%, – 11.50%, – 32.32% and – 81.17% respectively. In 2021, the company’s revenue continued to grow, and the profit side was affected by the intensification of market competition and the rise in the price of raw materials. In terms of cash flow, the net cash flow from operating activities in 2021 was 300 million yuan, with a year-on-year increase of – 14.15%. Among them, the net cash flow from Q4 operating activities was 74 million yuan, with a year-on-year increase of – 64.25%, which was mainly due to the decrease of 92.80% in net cash flow from financing activities and 248.02% in the increase of cash and cash equivalents.
Revenue side: color box business is growing rapidly year on year, and paper plastic packaging can be expected in the future
In terms of products, the company’s revenue from corrugated packaging, color box packaging, buffer packaging, industrial paper and other businesses in 2021 was RMB 127.78 million, RMB 659 million, RMB 231 million, RMB 3.533 billion and RMB 348 million respectively, with a year-on-year increase of + 40.64%, + 62.06%, – 11.04%, + 85.00% and + 0.81% respectively. The above businesses accounted for 72.82%, 3.75%, 1.32%, 20.13% and 1.98% respectively. The company continued to expand the color box printing business, relying on its stock customer advantages, complied with the customer’s consumption demand, upgraded and accurately sunk the market segment, grabbed the increment from the stock, and realized the year-on-year high-speed growth of color box packaging revenue in 2021. At the same time, the company pays attention to innovation and has leading technical advantages in corrugated packaging design, manufacturing and application. Through continuous R & D investment, the company effectively promotes technological innovation and product upgrading in various business fields; In 2021, the company obtained 518 patents, including 12 invention patents, 477 utility model patents and 29 design patents. The total number of patents increased by more than 100 compared with previous years. In addition, the company focuses on developing paper plastic packaging capacity, preliminarily plans the mass production of paper plastic production lines in Thailand factory and Shanghai Minhang factory, realizes the integration from design, mold manufacturing to production and test, and is expected to copy the model to more production lines in the future. Paper plastic technology can be expected in the future. Looking forward to 2022, the company will combine digital printing and it application technology to develop cutting-edge packaging technologies such as digital variable printing, digital watermark and AR packaging to meet the constantly diversified packaging needs; At the same time, increase scientific research investment and innovation, accelerate the research on core packaging technology and green environmental protection materials, effectively transform the research results, and provide support for the expansion of the company’s product line.
Profit side: the profitability is under pressure, and the expenses are well controlled during the period
In 2021, the gross profit margin and net profit margin of the company were 8.57% and 1.32% respectively, with a year-on-year increase of -2.80pct and -1.41pct respectively; In terms of quarters, the gross profit margin and net profit margin of the company in Q4 were 6.91% and 0.28% respectively, with a year-on-year decrease of -0.86pct and -1.86pct respectively. The gross profit margin decreased significantly, mainly due to the continuous expansion of the company’s business scale, the rise of raw material costs and the rise of prices. The decrease of net profit margin is lower than the gross profit margin, which is mainly due to the company’s large-scale advantages and its own good cost control. In 2021, the company’s expense rate was 7.03%, with a year-on-year rate of -1.09pct, of which the sales expense rate, management expense rate, R & D expense rate and financial expense rate were 2.05%, 2.65%, 1.74% and 0.60% respectively, with a year-on-year rate of -0.58pct, -0.60pct, + 0.12pct and -0.02pct respectively. By quarter, the expense rate in Q4 was 6.02%, Year on year + 1.12pct, including sales expense rate, management expense rate, R & D expense rate and financial expense rate of 1.13%, 2.71%, 1.73% and 0.45% respectively, with year-on-year + 1.55pct, -0.34pct, -0.02pct and -0.07pct respectively.
Buy back shares, improve the long-term incentive mechanism, and the profit distribution plan shows the determination to repay shareholders
In 2021, the company launched two consecutive rounds of repurchase plans, of which the first phase was completed on May 21, 2021, and the second phase is also in orderly progress. By the end of March 2022, the company’s two-phase repurchase plan had repurchased 40.3 million shares, accounting for 3.25% of the company’s current total share capital, and the total amount paid was 147 million yuan (excluding transaction costs). The repurchased shares will be used to implement the company’s equity incentive or employee stock ownership plan. While safeguarding the interests of the majority of investors, it will improve the company’s long-term incentive mechanism. On April 19, 2022, the company reviewed and approved the profit distribution plan of the company in 2021. Based on the total share capital on the equity registration date when the equity distribution in 2021 was implemented (deducting the repurchased shares in the special repurchase account), the company will distribute cash bonus of 1.50 yuan (tax included) to all shareholders for every 10 shares, and send 0 bonus shares (tax included) to all shareholders, and will not convert the accumulation fund into share capital.
Investment suggestions:
We are optimistic about the development potential of Xiamen Hexing Packaging Printing Co.Ltd(002228) . At present, the construction of all raised and invested projects of the company is accelerated and the production capacity continues to expand, which is expected to contribute to incremental profits. The “14th five year plan” for the development of circular economy in 2021 defines the actions to promote the green transformation of express packaging, the continuously optimized policy environment and a good development atmosphere, which are conducive to the development of leading industries. The company continues to scale up the supply chain platform strategy, and new technology & new platform gives the company vigorous development momentum; Increase R & D and innovation, enable the digitalization and innovation of packaging, and continuously improve the core competitiveness. It is expected to maintain a rapid growth rate in the future. We adjusted the forecast of the company’s revenue of 21.112/27.097 billion yuan in 22-23 years to 19.944/24.4 billion yuan, and the revenue in 2024 was 29.36 billion yuan; Considering that the company is affected by the intensification of market competition and the sharp rise in the price of raw materials, the eps0 of 22-23 years is reduced The forecast of 35 / 0.45 yuan is 0.20/0.25 yuan, and the EPS in 2024 is 0.31 yuan. Corresponding to the closing price of 3.78 yuan / share on April 20, 2022, and 19 / 15 / 12 times of PE from 2022 to 2024, maintaining the “buy” rating.
Risk tips:
1) risk of intensified industry competition. 2) Risk of rising raw material costs. 3) Financial expenses increase risk.
