\u3000\u3 China Vanke Co.Ltd(000002) 078 Shandong Sun Paper Co.Ltd(002078) )
Key points
Event:
The company released the first quarterly report of 2022, and the revenue / net profit attributable to parent company / net profit deducted from non attributable to parent company were RMB 9.67/68/660 billion respectively, with a year-on-year increase of + 26.5% / – 39.1% / – 39.2% and a month-on-month increase of + 16.7% / + 257.1% / + 211.8% respectively.
Comments:
The advantages of Forest Pulp paper integration helped the company take the lead in performance recovery: 1q2022, the average price per ton of Chinese double offset paper / coated paper / box board paper was 5880 / 5481 / 4884 yuan, which was – 559 / – 976 / + 195 yuan respectively compared with the same period last year. Although the average price of main products decreased compared with the same period last year, it benefited from the production of Guangxi Beihai 550000 T / a cultural paper project and 120000 T / a household paper project, And 800000 tons of dissolved pulp can obtain a better quotation in the upward period of pulp price, and the revenue in that quarter increased significantly.
Although 1q2021 saw a large year-on-year decline in the company’s net profit, there was a significant increase month on month, which was mainly benefited from the company’s previous large self prepared pulp capacity and 800000 tons of dissolved pulp capacity. At the same time, 4q2021, Guangxi 800000 tons / year chemical pulp and 200000 tons / year chemical mechanical pulp were put into operation, which played a good effect in the first quarter of this year, and the effect of the integrated layout of Forest Pulp and paper was undoubtedly revealed.
The gross profit margin increased significantly month on month, and the expense rate rose periodically during the period: 1q2022, the company’s gross profit margin was 14.0%, year-on-year -9.4pcts, month on month + 4.1pcts. In 1q2022, the average price per ton of China’s broad-leaved pulp was 5597 yuan, 1q2021 and 4q2021, and the average price per ton of China’s broad-leaved pulp was 5329 yuan / 4653 yuan respectively. The pulp price was higher than that in the same period last year, while the price of cultural paper was lower than that in 1q last year, resulting in a year-on-year decline in the company’s gross profit margin. However, benefiting from the improvement of its self-sufficiency rate of wood pulp, the production capacity of 800000 tons of dissolved pulp and the increase of cultural paper price in the first quarter of this year, the gross profit margin of the company has improved significantly month on month in the process of the sharp rise of pulp price month on month. We believe that 2q2022, the price rise of China’s broad-leaved pulp has shown weakness, and the current price of broad-leaved pulp is close to the peak price of 6300 yuan / ton of supply side reform in 2017. We predict that this round of price rise of China’s broad-leaved pulp has tended to ease. Whether the profitability of the company can continue to rise month on month, the main determinant will be the change of paper price, that is, whether the macro economy can improve. 1q2022, the company’s period expense rate was 6.2%, with a year-on-year increase of + 0.7pcts, of which the rates of sales, management, R & D and financial expenses were 0.4% / 2.5% / 1.9% / 1.3% respectively, which was flat / + 0.4 / + 1.0 / – 0.8pcts year-on-year. The rise of management expense rate was mainly due to the increase of amortization of equity incentive cost and the production of new projects in Guangxi base. The increase of production capacity increased the sewage treatment fee at the same time. As the production capacity of Guangxi Base climbed, the company’s period expense rate will be effectively controlled.
Fundamentals are expected to usher in an inflection point in 1q2022, Pb is lower than the historical average, and maintain the “buy” rating: in view of the company’s better than expected performance in 1q2022 and the easing of the rise in the price of China’s broad-leaved pulp, the company’s EPS from 2022 to 2024 will be increased to 1.12/1.43/1.48 yuan (the increase ranges are 4.7% / 4.4% / 4.2% respectively), and the current share price corresponding to PE is 11 / 8 / 8 times respectively. According to wind data, from 2017 to now, Shandong Sun Paper Co.Ltd(002078) historical Pb (MRQ) average is 1.98 times, and the current Pb (MRQ) of the company is 1.68 times, which is lower than the historical average, and the fundamentals of the company have ushered in an inflection point. With the effect of the follow-up national steady growth policy, the macroeconomic rise will drive the prosperity of the whole paper sector to pick up and maintain the “buy” rating.
Risk tip: China’s macro economy is lower than expected, and the price rise of wood pulp and thermal coal is higher than expected
