\u3000\u3 China Vanke Co.Ltd(000002) 078 Shandong Sun Paper Co.Ltd(002078) )
Key investment points
The company’s performance exceeded our expectations. In 2022q1, the operating revenue reached 9.667 billion yuan, a year-on-year increase of + 26.48% and a month on month increase of + 16.72%; The net profit attributable to the parent company was 675 million yuan, a year-on-year increase of – 39.08%, a month on month increase of + 258% over 2021q4; The net profit attributable to the parent company after deduction was 658 million yuan, with a year-on-year increase of – 39.22% and a month on month increase of + 211.85%.
Capacity release contributes mainly to the increment of revenue. In 2021, the company’s Beihai projects were put into operation successively, including 550000 tons of cultural paper, 120000 tons of household paper and supporting 800000 tons of chemical pulp and 200000 tons of chemical mechanical pulp. The continuous release of production capacity and climbing drive the continuous growth of revenue volume.
The pulp price is high, and the profit elasticity of dissolved pulp appears. The profit growth of Q2 pulp and dissolving paper mainly comes from the profit ratio of Q1 and 202. 1) 2022q1 pulp price is running at a high level. According to Zhuo Chuang data, during 2022q1, the price of coniferous pulp / broad-leaved pulp / chemical mechanical pulp / dissolved pulp increased by 1224 / 1175 / 1026 / 1600 yuan / ton respectively, which was + 21% / + 24% / + 24% / + 25% respectively compared with the beginning of 2022. 2) Due to the high pulp price and the improvement of supply and demand pattern brought by the increased demand for teaching aids in the downstream, the price increase of cultural paper has been well implemented. As of April 28, 2022, the average price per ton of double offset paper / double copper paper was 6250 / 5620 yuan / ton respectively, up 11% / 4% respectively compared with the beginning of 2022. The company’s self supplied pulp accounts for 55% – 60%. At the stage of rising pulp price and pressure on industry profit, the company’s cultural paper profit has improved significantly. In the follow-up, due to the delay of new capacity of overseas pulp plants and the continuation of the conflict between Russia and Ukraine, the wood pulp supply is still tight in the short term. We expect the high pulp price to continue to 2022h2, and the overall profit of the company is expected to continue to repair.
New projects continue to advance and the growth path is clear. 1) The company promotes the 150000 ton household paper project of Guangxi Beihai base. It is expected that the first phase of 100000 ton production capacity will be completed and put into operation in 2022h2, further enriching the company’s household paper product structure; 2) The acquisition of Liujing Chengquan in Guangxi (150000 tons of pulp and 200000 tons of paper per year), and the official launch of the “5.25 million tons of Forest Pulp integration and supporting industrial park project” in Nanning, Guangxi base, further the layout of Forest Pulp paper integration; 3) Shandong zouchengji base plans to build a special paper project with an annual output of 34000 tons, which is expected to be put into operation in 2023q1 to improve the company’s multi paper layout.
The cash flow is good and the operation efficiency is improved. In terms of cash flow, the net operating cash flow of 2022q1 company was 1.035 billion yuan, a year-on-year increase of – 46.55%; The ratio of net cash flow from operating activities to net income from operating activities was 144.53%, with a year-on-year increase of -1.97pp. In terms of operation efficiency, the company’s 2022q1 inventory turnover days were -8.82 days to 35.63 days year-on-year, and the turnover days of accounts receivable were -4.91 days to 21.37 days year-on-year, which improved the operation efficiency.
Profit forecast and investment rating: we maintain the previous profit forecast. It is estimated that the net profit attributable to the parent company from 2022 to 2024 will be 3.04/34.7/3.81 billion yuan respectively, corresponding to 10 / 9 / 8x PE from 2022 to 2024, maintaining the “buy” rating.
Risk tip: energy and freight costs remain high, and downstream demand is lower than we expected.
