\u3000\u3 Bohai Water Industry Co.Ltd(000605) 007 Quzhou Wuzhou Special Paper Co.Ltd(605007) )
Event: the company released the 2021 annual report and the first quarterly report of 2022. In 2021, the annual / 21q4 / 22q1 revenue was 3.69/10.0/1.33 billion yuan respectively, with a year-on-year increase of + 40% / 53% / 75%; The net profit attributable to the parent company was RMB 390 million / 76 million / 103 million respectively, with a year-on-year increase of + 15.2% / – 19.5% / – 8.7%.
22q1 saw the production and sales trend, with a significant increase month on month, and the production capacity climbing brought about a quarterly increase in the market. In 2021, the revenue growth of food packaging paper / gracine paper / transfer paper / tracing paper was + 17.8% / 13.8% and 80.58% / 37.97% respectively. 22q1 revenue was + 32.4% month on month and net profit was + 35.5% month on month. The company’s 50wt (original total capacity of 85wt) new capacity began to deliver performance. The ramp speed of capacity exceeded expectations, and the strong downstream demand led to the saturation of production and marketing rate. The production capacity of food stuck in hand is 78wt, with a total production capacity of 1.35 million tons. The total production capacity increases by about 60% at the same time. The leading market position of food packaging paper is further consolidated.
In 21q4, the profit margin is tenacious, the price increase is realized, the transmission is excellent, and the scale effect of large-scale base reaching production is released. The gross profit margin of the company was 22.7% and the net profit margin was 21.7% / 11.7% under the pressure of Q3 / 11% / 11%, respectively. The price increase range of 22q2 increased month on month (the price of food card increased by 500 yuan / ton in early April and 200 yuan / ton in early May). Based on the good relationship between supply and demand, the price increase is implemented smoothly. Jiangxi base with cogeneration accounts for 75% of the total production capacity. Energy cost savings and large-scale procurement brought by self-sufficiency of electricity and steam continue to strengthen profitability with rapid production. 22q1 the increase in financial expense rate is mainly due to the increase in interest expense of convertible bonds. After excluding this expense, the month on month growth rate of business profit is higher than that of income.
High prosperity track subdivision leader, pulp and paper integration ecology opens the prospect. The food packaging track has three driving forces: Plastic prohibition, fast food and tea, electronics and medicine bag extension, with broad growth and space. According to the announcement, the company plans to build a chemical mechanical pulp production line with an annual output of 300000 tons, which is expected to be completed in 24q1, which will bring profit thickening and profit fluctuation reduction in the long term. It is estimated that the net profit in 22-24 years will be RMB 660 / 850 / 1.09 billion, with a year-on-year increase of 68.6% / 29.2% / 28.2%, and the corresponding PE is 8.3x/6.5x/5.0x. The company’s valuation is at the bottom of history, the short-term and medium-term profits are rising, which are cashed quarterly, the long-term pulp and paper integration ecology improves the competitiveness dimension, and maintains the “buy” rating.
Risk warning. The price of raw materials fluctuates sharply, the production capacity is less than expected, the risk of repeated epidemic, the risk of intensified market competition, etc.
