Industry perspective update:
Home furnishing: judging from the performance of enterprises in Q1, when the overall industry revenue growth slows down and the profit is under pressure, the head enterprises have strong toughness and the income of European School exceeds the expectation, Suofeiya Home Collection Co.Ltd(002572) also began to show the effect of reform. The retail channel has increased by nearly 20%. On the whole, the differentiation has intensified, and the difference in the ability of retail channels will significantly widen the gap between enterprises. From the current fundamentals and the income side, the impact of the short-term epidemic does exist, but the demand lags behind and will not disappear, and the impact of the whole year is limited. From the profit side, the software sector Q1 has shown a profit repair trend, and the customized sector is expected to gradually show a profit repair trend in the second half of this year. At present, with the continuous implementation of loose real estate policies in many places, there is still significant room for repair in the valuation of the home sector. On the whole, we are still optimistic about Oppein Home Group Inc(603833) , Jason Furniture (Hangzhou) Co.Ltd(603816) and Suofeiya Home Collection Co.Ltd(002572) , which are significantly ahead in comprehensive ability.
New type of tobacco: in terms of atomization sector, China is currently in the transition period. Considering that the terminal experienced the superposition of hoarding tide in March, the focus of various brands gradually shifted to tobacco flavor products during the transition period, we expect the overall industry sales to be relatively stable during the transition period. From the production side, in the short term, due to regulatory restrictions during the transition period, new e-cigarette manufacturers and existing enterprises expand production capacity, China’s top enterprises with large capacity reserves are expected to benefit. In the long term, the entry threshold of the industry is raised, and superimposed products need strict technical certification to promote stronger stickiness between brands and manufacturers, and the production pattern is expected to be significantly optimized. In addition, in terms of export, njoyace, which was OEM by smore, passed the US PMTA this week, which is the first ceramic core product approved. While verifying the company’s technical ability, the probability of approval of the company’s key customer British American Tobacco VUSE has increased significantly, and the growth certainty of smore’s overseas business is still high. On the whole, SIMORE’s short-term performance may be subject to fluctuations in the Chinese market, but the certainty of long-term growth is improving. Under the current valuation level, the value of long-term layout is prominent.
Papermaking: the pulp and paper department has entered the profit recovery period, and pay attention to the inflection point of pulp price in the short term. The high pulp price supports the cost driven price rise of paper enterprises. It is suggested to pay attention to special paper targets with a better pattern and pulp leaders with high self supply rate of raw materials and expected quarterly improvement in net profit per ton. Energy cost repression weakened month on month, cost driven price increases fell to the ground, and profits began to be repaired quarterly. In terms of pulp cost, the UPM strike ended. In June, the production capacity of 1.56 million tons of broad-leaved pulp in Arauco, Chile is expected to be put into operation. The supply side constraints are gradually alleviated. In the short term, we need to pay attention to the arrival of the inflection point of pulp price. Import pressure relief + export repair improve industry supply and demand, but under the background of general demand performance in China, the repair rhythm is expected to be stable.
Investment advice
Home furnishing: recommend Oppein Home Group Inc(603833) (Integrated Business & platform), Jason Furniture (Hangzhou) Co.Ltd(603816) (smooth increase of domestic sales share & export profit elasticity), Suofeiya Home Collection Co.Ltd(002572) (it is improving in many aspects, and there is a large space for valuation repair).
Papermaking: it is suggested to pay attention to Shandong Sun Paper Co.Ltd(002078) , highlight the performance flexibility of pulp category layout, smooth the dull profit performance of downstream paper products, and drive 1q’s performance to exceed expectations. Cultural paper has entered the peak season, the demand has warmed up and the stock has been replenished & under the background of low profit, the price increase of the paper mill gradually fell to the ground in April, and the profit per ton has recovered to about 400 yuan. Under the production of 800000 tons of chemical pulp in Guangxi, the high price of external pulp has a limited impact on the cost side; In the medium term, Nanning’s 5.25 million ton capacity release supports the growth logic.
Risk factors
The extent and duration of the slowdown in China’s consumption growth exceeded expectations; Real estate sales have been shrinking sharply for a long time; The price of raw materials rose faster and longer than expected; Risk of large exchange rate fluctuations
