The light industry sector performed slightly worse than the market in the first half of 2022. The introduction of the steady growth policy in 2022 encountered the multi-point spread of the epidemic in China, and the overall consumer demand was weak. The overall performance of the light industry sector in the first quarter was slightly lower than that of the market. The light industry manufacturing industry index fell 15.8% and the Shanghai and Shenzhen 300 index fell 14.5%. Among them, the paper sector benefited from the price increase of paper products, and the landing excess return was significant. At the current time point, the overall valuation of the light industry sector has fallen back to a historically low level, with home furnishing, papermaking and entertainment at the bottom of the historical valuation, highlighting the value of high-quality enterprises.
Looking forward to the second half of the year, we are firmly optimistic, set the tone and build a bottom for recovery. 1) Household: the steady growth policy continues to be introduced, the expected marginal improvement of real estate is expected, and the demand for orders delayed by the epidemic in the first half of the year is expected to be gradually replenished. With the gradual digestion of the expectations of real estate bottom, order bottom and performance bottom, it is suggested to pay attention to the recovery trend of the home sector in the second half of the year. 2) Papermaking: the overall supply and demand pattern is still stable. The impact of imported paper on the supply side decreased in the first half of the year, and the investment of new production capacity is limited. It is expected to advance steadily in the second half of the year; On the demand side, the steady demand in China and the significant increase in overseas demand have driven the growth of paper export. Under the background of the continuous high price of wood pulp, the price increases of leading paper enterprises have been successfully implemented for many times, and the industry boom has gradually warmed up. 3) Packaging and printing: the layout of paper packaging is advancing rapidly, the revenue scale is expected to continue to develop steadily, the cost pressure of raw materials is expected to ease in the future, and the profitability is expected to be repaired. 4) Entertainment supplies: we believe that with the subsequent gradual recovery of China’s consumption environment, the consumption sector that must be selected for the light industry sector will rebound. The long-term space of the industry is still broad, and the logic of both quantity and price remains unchanged. The leader is still expected to welcome the coming and returning to the Soviet Union with strong brand power, product power and channel power. 5) New type tobacco: 2022 will be the year of global new type tobacco regulation. The implementation of industry norms will drive the stable development of the industry. In the future, the market share is expected to further concentrate on leading enterprises.
Grasp the rhythm of demand and layout the leader. In the second half of 2022, we suggest that investors allocate sub industries whose demand is expected to pick up. The valuation of leading enterprises has experienced early correction, and has now fallen to a historically low level, highlighting Baima’s long-term value allocation. 1) Optimistic about the recovery trend of the household industry after the epidemic in the second half of the year, household enterprises with channel tension and same store potential are expected to take the lead in recovery. It is recommended that Oppein Home Group Inc(603833) , Suofeiya Home Collection Co.Ltd(002572) , Jason Furniture (Hangzhou) Co.Ltd(603816) . 2) In the second half of the year, with the gradual appearance of the effect of the steady growth policy, we are optimistic about the performance of papermaking leaders who underestimate the value and follow the cycle. In the past 22 years, the leading paper enterprises have driven the recovery of income through the continuous layout of production capacity and increasing exports. The cost side advantage has been further highlighted. It is recommended that Shandong Sun Paper Co.Ltd(002078) . 3) It is suggested to pay attention to the rapid promotion of the layout of the leading large packaging of paper packaging, the continuous and steady development of the revenue scale is expected, the pressure on the cost of raw materials is expected to be relieved in the future, the efficiency of superimposed smart factories is expected to be improved, and the profitability is expected to be repaired. It is recommended that Shenzhen Yuto Packaging Technology Co.Ltd(002831) . 4) It is suggested that the cultural and entertainment sector should pay attention to the economic recovery of the stationery sector after the epidemic. The long-term space of the industry is still broad, and the logic of simultaneous driving of volume and price remains unchanged. The leader is still expected to usher in the recovery first with strong brand power, product power and channel power. It is recommended that Shanghai M&G Stationery Inc(603899) .
Risk factors: the price of raw materials fluctuates sharply and the risk of a large-scale outbreak of the epidemic.
