\u3000\u3 China Vanke Co.Ltd(000002) 078 Shandong Sun Paper Co.Ltd(002078) )
Event: the company released the first quarterly report of 2022, and the performance exceeded expectations. The company achieved a revenue of 9.667 billion yuan in 22q1, with a year-on-year / month on month ratio of + 26.48% / + 16.73% respectively, and the revenue continued to increase; The net profit attributable to the parent company was 675 million yuan, with a year-on-year / month on month ratio of – 39.08% / + 258% respectively; The decline in net profit was mainly due to the high base of net profit in the same period last year (21q1 net profit of 1.108 billion yuan, year-on-year + 106.59%).
High profit growth month on month is an excellent observation window for profit toughness. 22q1 pulp and paper department has improved the marginal supply and demand pattern, and the demand side: cultural paper has entered the traditional peak season, publishing orders have been released to boost domestic demand, and export sales have continued the high boom of 21q4; Supply side: affected by the shortage of shipping, the rise of energy and other factors, the import volume of cultural paper has decreased, the supply pressure has been relieved, and the rising pressure on the cost side has accelerated the clearance of small and medium-sized production capacity in the industry, and the supply pattern has improved; Cost side: the pulp price fluctuated higher, forming a strong support for the paper price. The scale of the company’s 22q1 revenue side increased significantly under the price increase + capacity release, and the single quarter revenue was close to 10 billion; The profit side achieved high elasticity against the background of the release of its own pulp capacity + the decline of energy costs such as coal, which was significantly improved month on month.
Nanning’s 5.25 million ton Forest Pulp and paper integration project has been promoted in an orderly manner to consolidate its leading position in comprehensive papermaking. Since the signing of the investment agreement in February, the company has orderly promoted the integrated construction project of 5.25 million tons of Forest Pulp and paper in Nanning, Guangxi. According to the investment agreement, the main products include high-grade packaging paper, plastic substitute paper, coated paper, double offset paper, special paper-based new materials, pulp and other products, as well as upstream and downstream packaging, printing, paper deep processing, intelligent storage, wharf, logistics and other supporting equipment. After putting into operation, it will further enrich the company’s product matrix, create a complete raw material supply system and continuously improve the company’s core competitiveness.
Q2 starts a new round of price increase, and the off-season is approaching. It is optimistic about the business toughness. Since Q2, paper prices have remained high. Recently, paper enterprises have issued a new round of price increase letters again, specifically, cultural paper has increased by another 200 yuan / ton and white card by 300 yuan / ton since May. The company’s cultural paper and coated base paper will be increased by 200 yuan / ton respectively. We are optimistic that the company will use its own pulp to consolidate its cost advantage under the high pulp price, and the off-season is approaching + the high cost will accelerate the liquidation of the industry. As a diversified pulp and paper leader, the company has business toughness and is expected to continue to improve its market share. It is estimated that the net profit attributable to the parent company in 22-24 years will be RMB 3.035/34.56/3.664 billion respectively, with a year-on-year increase of + 2.6% / 13.9% / 6.0%, corresponding to PE of 10.5x/9.2x/8.7x, maintaining the “buy” rating.
Risk warning. The price of raw materials fluctuates sharply, the production capacity is less than expected, the market competition intensifies, and the epidemic risk is repeated.
