\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 966 Shandong Bohui Paper Industry Co.Ltd(600966) )
Event:
The company released the first quarterly report of 2022. 1q2022 achieved revenue / net profit attributable to parent company / net profit deducted from non attributable to parent company of 4.140181/175 billion yuan respectively, with a year-on-year increase of + 2.2% / – 77.7% / – 78.3% respectively. Operating net cash flow was 149 million yuan, a year-on-year increase of – 92.1%.
Comments:
Exports boosted the prosperity of white card in the first quarter, and the 1q fundamentals of the company improved month on month: 1q2022, the average price of Chinese white card paper was 6116 yuan / ton, compared with 8423 yuan / ton in the same period last year, a year-on-year increase of – 27.4%, compared with 4q2021, the average price of white card paper was 6019 yuan / ton, a month on month increase of 97 yuan / ton, and the price increased month on month, which improved the prosperity of white card paper compared with 4q2021.
1q2022, under the background of relatively low consumption in China and affected by the epidemic, exports have taken up the banner of supporting the prosperity of China’s white cardboard industry. 1q2022, China’s total net exports of white cardboard and whiteboard were 731000 tons, while China’s cumulative net exports in the same period last year were 215000 tons. The sharp increase in exports helped China’s white cardboard industry, It has effectively digested the 900000 tons of capacity put into operation by 4q Shandong Sun Paper Co.Ltd(002078) parent company last year and the 900000 tons of capacity put into operation by 1q Indonesia app this year. We believe that there is a shortage of paper production capacity in Europe due to the impact of factors such as energy, raw material prices and strikes. It is expected that this factor will continue to ferment. We are optimistic about the prospect of China’s white cardboard export this year.
The gross profit margin decreased significantly year-on-year, improved significantly month on month, increased R & D investment, and increased the expense rate during the period: 1q2022, the company’s gross profit margin was 14.9%, year-on-year -18.5pcts, month on month + 11.4pcts. The change in profitability was mainly related to the sharp decrease in the average price of white cardboard year-on-year, while the increase in month on month.
1q2022, the company’s period expense rate was 8.4%, year-on-year + 2.1pcts. The rates of sales / management / R & D / financial expenses are 0.6% / 3.4% / 2.9% / 1.5% respectively, with a year-on-year increase of + 0.2 / + 0.3 / + 0.9 / + 0.7pcts. We believe that on the one hand, the increase of the company’s expenses is rigid, while the company’s 1q revenue only increased slightly year-on-year. On the other hand, the company continued to increase R & D investment, which increased the expense rate during the period year-on-year.
The rising trend of pulp price is expected to slow down. After the epidemic, domestic demand starts and the industry boom is expected to continue to improve: since the fourth quarter of last year, the global wood pulp price has risen sharply. At present, the price of China’s broad-leaved pulp is 6022 yuan / ton, only one step away from the high point of 6300 yuan / ton of supply side reform in 2017. However, the boom of China’s bulk paper industry is significantly weaker than that in 2017. In April, the price of broad-leaved pulp in China fell by 107 yuan / ton month on month, ending the situation of rising for five consecutive months since November 2021. Although the decline in the price of broad-leaved pulp in April is related to the epidemic in China, we predict that the rising trend of pulp price is expected to slow down.
In March, the operating rate of white cardboard in China was 77.8%, the enterprise inventory was 22 days, and the social inventory was 1.11 million tons, all at the historical average level. We believe that once the epidemic situation in China improves in May, with the gradual start of Chinese demand, the prosperity of white cardboard industry is expected to continue to improve.
Fundamentals are expected to continue to improve month on month in 2q2022, Pb is lower than the historical average, and maintain the “buy” rating: we maintain the company’s EPS forecast of 0.97/1.22/1.47 yuan from 2022 to 2024, and the corresponding PE of the current stock price is 7 / 6 / 5 times respectively. According to wind data, from 2017 to now, Shandong Bohui Paper Industry Co.Ltd(600966) historical Pb (MRQ) average is 1.8 times, and the current Pb of the company is 1.26 times (MRQ), which is lower than the historical average. Moreover, we expect the prosperity of China’s white cardboard industry to continue to rise in 2q2022 and maintain the “buy” rating.
Risk tip: China’s macro-economy is lower than expected, and the prices of wood pulp and thermal coal are higher than expected.
