\u3000\u3 China Vanke Co.Ltd(000002) 078 Shandong Sun Paper Co.Ltd(002078) )
Event: the company announced in the first quarter that in 2022q1, the operating revenue was 9.667 billion yuan, a year-on-year increase of 26.48%, and the net profit attributable to the parent was 675 million yuan, a year-on-year decrease of 39.08%.
Comments:
Q1 revenue growth is bright, pay close attention to the construction of new production capacity and enhance development competitiveness. 22q1’s revenue increased by 26.48% year-on-year, mainly due to the release of new production capacity and the recovery of paper price in the first quarter. In terms of production capacity, the company continues to promote the project layout. 1) the 3.5 million ton “Forest Pulp paper integration” project in Beihai, Guangxi has been successfully put into trial production in 2021, and the company will make efforts to achieve full production and efficiency in the new project in 2022; 2) Guangxi wood pulp Co., Ltd. is expected to invest 1.2 million tons of self-made paper in the second half of the year, with a total investment of 1.2 million tons in the second half of the year. It is expected to make full use of the advantages of Guangxi wood pulp project, which is expected to be completed in the second half of the year; 3) On February 25, 2022, the company plans to acquire 100% equity of Guangxi liujingcheng with RMB 1.5 billion, marking the official launch of the “Forest Pulp and paper integration and supporting industrial park project with an annual output of 5.25 million tons” signed with Nanning government. Liujingcheng has an annual output of 150000 tons of pulp and 200000 tons of paper, and realizes the stable production of relevant paper machines and pulp lines in the shortest time under the full compliance with the requirements of environmental protection and safety. 4) Shandong taiyanghonghe Paper Co., Ltd., a wholly-owned subsidiary of the company approved in December of 21, has an annual output of 34000 tons of ultra-high strength special paper project, which is expected to be put into operation in the first quarter of 23.
22q1 company’s profitability improved month on month and its operation ability was outstanding. In terms of gross profit margin, the gross profit margin of 22q1 company was 13.97%, with a month on month increase of + 4.07pct and a year-on-year increase of -9.47pct, realizing a month on month improvement. The year-on-year decline in gross profit margin was mainly due to the significant rise in the price of bulk raw materials. In terms of expenses, the rates of sales, management, R & D and financial expenses in Q1 were 0.4% (+ 0.01pct), 4.43% (+ 1.41pct), 1.91% (+ 0.99pct) and 1.33% (- 0.76pct) respectively. The increase in management expenses was mainly due to the year-on-year increase in the amortization of equity incentive costs and the increase in the production capacity of new projects in Guangxi base. In terms of net interest rate, the parent net interest rate of 22q1 was 6.98%, with a month on month increase of + 4.17pct and a year-on-year increase of -7.51pct, which also achieved a month on month improvement. In terms of operation, the inventory turnover rate of Q1 company increased by 0.51pct to 2.53% year-on-year, the net business cycle was 14.55 days, a year-on-year decrease of 14 days, and the operation capacity increased steadily.
Profit forecast: we are optimistic about the improvement trend of the company’s profits quarter on quarter. In the future, the continuous production capacity will drive the scale expansion, the rapid layout of Forest Pulp and paper integration, and the increase of the proportion of self supplied pulp is expected to further strengthen the cost advantage. It is estimated that the net profit attributable to the parent company from 2022 to 2024 will be 3.049 billion yuan, 3.241 billion yuan and 3.531 billion yuan respectively, with a year-on-year increase of 3.1% / 6.3% / 8.9% respectively. The current share price (2022 / 4 / 28) corresponds to 10x PE and 1.5x PB in 22 years, maintaining the “buy” rating.
Risk factors: the risk of intensified industry competition and the risk of price fluctuation of raw materials.
