\u3000\u3 China Vanke Co.Ltd(000002) 078 Shandong Sun Paper Co.Ltd(002078) )
Key investment points
Q1 earnings improved significantly month on month, and the recovery momentum of Q2 is expected to continue
In terms of product segmentation, 1) cultural paper: the average price of 22q1 coated paper / double offset paper is 5484 / 5886 yuan respectively (year-on-year – 15.32% / – 8.84%, month on month + 2.28% / + 6.69%). With the reduction of imported paper and the improvement of supply and demand, the cost of wood pulp and energy cost are reduced (the average price of coal is 797 yuan / ton, year-on-year + 21.22%, month on month – 17.93%). The price increase letter of the paper factory is gradually implemented, and the profitability of cultural paper is gradually improved. 2) Box board paper: the average price of 22q1 box board paper was 4883 yuan (year-on-year – 0.95%, month on month – 5.55%). The performance of paper price in the off-season weakened, benefiting from the company’s semi chemical pulp cost advantage, outstanding high-end box board quality and stable profitability. 3) Dissolved pulp: the average price of 22q1 dissolved pulp was 7275 yuan (year-on-year + 1.88%, month on month + 10.32%), benefiting from demand driven and rising pulp price, the price of dissolved pulp continued to rise, and the profitability of 22q1 was steadily improved. 4) Chemical pulp: affected by the damage of transport capacity in Canada, the situation in Russia and Ukraine, the UPM strike and other supply side disturbances, the prices of 22q1 coniferous pulp and broad-leaved pulp entered the upward channel (up 35.22% and 28.10% respectively compared with the low point of 21q4). Some of the company’s new chemical pulp capacity was sold out, forming a strong support for Q1 performance. Looking ahead to Q2, in terms of product price, the current average price of coated paper / double offset paper is 5680 / 6225 yuan respectively, an increase of 3.57% / 5.76% compared with the average price of Q1; The price of dissolved pulp is 8200 yuan, an increase of 12.71% over the average price of Q1. Coniferous pulp and broad-leaved pulp are still in the upward channel. Without actual improvement at the supply side, the pulp price is expected to remain high. It is expected that Q2 will continue its strong recovery momentum and the profit will continue to improve.
Good profit control and cost control
(1) the gross profit margin of 22q1 company was 13.97% (year-on-year -9.47pct, month on month + 4.07pct), which was mainly due to the year-on-year weakening of paper price and the sharp rise of cost (including the year-on-year + 21.22% of coal price); The period cost rate is 6.16% (+ 0.67pct). In terms of expense rate, the company’s period expense rate is 6.16% (+ 0.67pct), sales expense rate is 0.40% (+ 0.01pct), management + R & D expense rate is 4.43% (+ 1.41pct), and financial expense rate is 1.33% (- 0.75pct). The increase of management expense is mainly due to the increase of sewage treatment fee caused by amortization of equity incentive cost and production capacity investment. At the same time, the company increases the investment of R & D expense; Corresponding to the company’s net interest rate of 6.98% (YoY -7.51pct, mom + 4.71pct), the company’s profitability increased month on month.
(2) at the end of 22q1, the company’s inventory was 3.080 billion yuan (a decrease of 427 million yuan over the beginning of the year), fixed assets were 28.554 billion yuan (an increase of 632 million yuan over the beginning of the year), and construction in progress was 1.232 billion yuan (an increase of 938 million yuan over the beginning of the year); The asset liability ratio was 56.19% (compared with the beginning of the year + 0.22pct).
(3) the net operating cash flow of 22q1 company was 1.035 billion yuan, a decrease of 901 million yuan over the beginning of the year, mainly due to the significant increase in cash paid for purchasing goods and receiving labor services during the period.
Guangxi project is put into operation to improve efficiency, and the integration of Forest Pulp and paper is developed in depth
The 550000 tons of cultural paper, 800000 tons of chemical pulp and 200000 tons of chemical mechanical pulp of 21q4 company’s Guangxi project have been put into operation. It is expected to achieve full production in 22 years, contributing to the company’s performance. At present, the company’s total paper and pulp production capacity has reached 10 million tons, and the self-sufficiency rate of wood pulp has been further improved, helping the company improve quality and efficiency. In February, 22, the company signed a framework agreement with Nanning municipal government and invested in the construction of a forest pulp paper integration project with an annual output of 5.25 million tons in Nanning. Nanning has significant geographical advantages. On the one hand, it is close to Beibu Gulf Port Co.Ltd(000582) , with convenient waterway transportation. On the other hand, it is close to ASEAN countries and can form good coordination with Laos base; At the same time, Nanning is rich in forestry resources, has a good foundation for logistics transportation and industrial chain supporting, and has prominent cost advantages in transportation and raw materials; The first phase of Nanning project will focus on the construction of box board capacity. With the landing of production capacity, the scale advantage is further revealed. The freight and raw material cost advantages of Guangxi base are prominent, which is optimistic about the continuous improvement of the company’s benefits.
Profit forecast and valuation
As a leading paper enterprise with the strongest profitability, the company integrates Forest Pulp paper to build cost advantages, capacity expansion to ensure growth, and the medium-term growth logic is smooth. Comprehensively considering the quarterly improvement of the company’s profits and the production of high-efficiency projects in Guangxi, the company is expected to achieve revenue of 37.698 billion yuan, 40.242 billion yuan and 42.559 billion yuan in 22-24 years, with a year-on-year increase of 17.82%, 6.75% and 5.76%; The net profit attributable to the parent company was RMB 3.100 billion, RMB 3.283 billion and RMB 3.415 billion, with a year-on-year increase of 4.84%, 5.89% and 4.02%, and the corresponding PE was 10.29x, 9.72x and 9.34x respectively, maintaining the buy rating.
Risk tips
The rise of raw materials, the demand is lower than expected, and the rise of paper price is lower than expected
