\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 963 Yueyang Forest & Paper Co.Ltd(600963) )
Event: Yueyang Forest & Paper Co.Ltd(600963) released the annual report of 2021 and the first quarterly report of 2022. In 2021, the company achieved an operating revenue of 7.838 billion yuan, a year-on-year increase of 10.15%; The net profit attributable to the parent company was 298 million yuan, a year-on-year decrease of 28.05%; The net profit attributable to the parent company after deduction was 210 million yuan, a year-on-year decrease of 44.27%. In 2022q1, the company realized an operating revenue of 1.669 billion yuan, a year-on-year decrease of 14.97%; The net profit attributable to the parent company was 124 million yuan, a year-on-year decrease of 25.63%; The net profit attributable to the parent company after deduction was 113 million yuan, a year-on-year decrease of 26.49%.
The demand for cultural paper is under pressure, and the performance in the second half of 2021 is suppressed
In terms of cultural paper, from January to April 2021, the centenary of the founding of the party focused on releasing demand and supporting the upward rise of paper price. After the introduction of the double reduction policy in May, the rise of sea freight blocked exports and put pressure on paper prices. The annual demand for cultural paper declined slightly. In 2021, the output of uncoated cultural paper was about 17.4 million tons, a year-on-year decrease of 100000 tons, and China's supply decreased accordingly. In terms of ecological business, the increment of traditional garden industry in 2021 is insufficient to curb demand. In 2021q1-4, the company's revenue was 1.963 billion yuan, 1.947 billion yuan, 1.866 billion yuan and 2.062 billion yuan respectively, with year-on-year changes of + 55.79%, + 9.04%, + 1.31% and - 7.47% respectively; The net profit attributable to the parent company was 167, 143, 47 and - 59 million yuan respectively, with year-on-year changes of + 91.35%, + 169.35%, - 63.03% and - 140.47% respectively.
The profitability of 22q1 was repaired month on month, and the expenses decreased slightly during the period
In terms of profitability, the gross profit margin of the company's sales in 2021 was 15.11%, a year-on-year decrease of 3.86pct, mainly due to changes in accounting standards and the continuous rise in the prices of raw materials such as 2021h2 energy and wood pulp. The net interest rate was 3.85%, a year-on-year decrease of 1.97pct. The gross profit margin of 22q1 company was 18.70%, up 11.52pct month on month and down 2.40pct year on year compared with 21q4; The net interest rate was 7.50%, up 10.33pct from 21q4, down 1.03pct year-on-year.
In terms of period expenses, the company's period expense rate in 2021 was 10.73%, a year-on-year decrease of 1.13pct. The sales expense rate, R & D expense rate, management expense rate and financial expense rate increased from -2.80pct, -0.20pct, + 0.47pct and + 1.40pct to 1.52%, 3.17%, 3.73% and 2.31% respectively year-on-year. The significant reduction of sales rate is mainly due to the change of accounting standards and the change of logistics expenses to operating costs. The management expense ratio has increased due to the non continuation of previous subsidies and support and the addition of new stock incentives in the current period. The financial expense is a substantial increase in interest expense, with a year-on-year increase of 116 million yuan.
In terms of cash flow, the net operating cash flow of the company in 2021 was 342 million yuan, a year-on-year decrease of 645 million yuan, mainly due to the release of 240 million yuan of structural deposits in the same period last year, superimposed with the rise in raw materials and labor costs this year.
The integrated layout of Forest Pulp and paper, and the cost advantage in the upward period of pulp price is expected to appear
The industrial chain layout of the company is comprehensive, the supply rate of self-produced pulp exceeds 50%, and the purchase price is further reduced by relying on the centralized purchase platform of China's paper industry. The supply of pulp board is stable and the cost advantage is obvious. Affected by the strike of overseas pulp mills, weather and other factors, the pulp board price will remain high in the short term, and the cost advantage of the company will further appear. The company will continue to increase the size of pulp and paper layout and consolidate the cost advantage. At present, it has acquired 200000 tons of chemical mechanical pulp capacity of Yuanjiang paper factory, and has carried out the preliminary work of production line purchase and relocation. In terms of supply and demand, the market of Party and government books continues to grow, and the demand for packaging paper is driven by the policy of replacing plastic with paper. Under the policy of "double carbon" and "double control", the clearance of small production capacity is expected to accelerate, and the relationship between supply and demand is expected to improve.
Forestry carbon sequestration is in the ascendant, and long-term growth is still worth looking forward to
China is committed to achieving carbon peak in 2030 and carbon neutralization in 2060. Forestry carbon sink realizes negative emissions through afforestation and reforestation. It is not only a necessary way to complete carbon neutralization, but also one of the main types of CCER. At present, the carbon emission trading market (currently dominated by CEA, and CCER is expected to be incorporated) has been piloted and opened in some regions. At the end of March, the carbon price in the national unified market was 55 + yuan / ton, which is a large gap compared with the European carbon price of 80 + euros / ton. There is a large room for the rise of trading volume and price in the future, and it is expected to be in a stable upward trend. Forestry carbon sequestration development has high technical and financial barriers. Relying on the background of central enterprises, resource advantages and technical experience, the company has started carbon sequestration trading since 2017, participated in the formulation of the country's first forestry carbon sequestration standard, and is the organizer of carbon sequestration branch of China Forestry Industry Federation. At present, the company has strategically deployed Senhai carbon sequestration platform, with a layout of 2 million mu of forest resources, covering 18 provinces, 58 cities, districts and counties. The company plans to achieve a total contracted forestry carbon sequestration of 50 million mu in 2025.
Investment suggestion: the company is the leader of China's forestry pulp and paper integration, continues to promote the development of pulp and paper + ecological dual core, and the long-term growth of forestry carbon sequestration business can be expected. We estimate that Yueyang Forest & Paper Co.Ltd(600963) from 2022 to 2024, the operating revenue will be 8.415 billion yuan, 10.359 billion yuan and 12.092 billion yuan, with a year-on-year increase of 7.36%, 23.10% and 16.73%; The net profit attributable to the parent company was RMB 355 million, RMB 424 million and RMB 565 million, with a year-on-year increase of 19.13%, 19.49% and 33.21%, and the corresponding PE was 21.3x, 17.8x and 13.4x. Considering that the pressure of policy and cost is still large, the investment rating of overweight-a is given.
Risk warning: the price of raw materials fluctuates, the downstream demand is less than expected, and the price of paper is less than expected
