Industry perspective update:
Home furnishing: this week, the software home furnishing leader Gu Jia took the lead in releasing the performance forecast for 2021. The overall performance is relatively excellent, and the leader’s profit toughness appears. On the whole, we judge that most leading home furnishing enterprises will still achieve ideal growth on the revenue side in the fourth quarter of 2021, and the profit side of software home furnishing enterprises will also meet previous expectations. In terms of customized home furnishing, in addition to the provision for impairment of receivables of some enterprises’ contingent engineering business, on the whole, the operating profit will also meet previous expectations (see the performance forecast below for details). When the end of the real estate policy has been basically proved, the overall household demand is expected to usher in a marginal reversal, and the previous valuations of the sector and mainstream stocks have fallen to a low level, the sustainability of the overall market of the sector is worth looking forward to. From the perspective of flexible strategy, we continue to focus on Suofeiya Home Collection Co.Ltd(002572) improving its own market. We believe that Suofeiya Home Collection Co.Ltd(002572) has undergone positive changes from strategy to terminal implementation, the performance growth is expected to return to the normal track, and the valuation has a lot of room for revision. From the perspective of long-term stable strategy, continue to focus on recommending European School and family care.
New type of tobacco: in terms of atomization, smore officially announced that it would officially release a new generation of atomization technology in London on January 18. We believe that on the one hand, the new generation of technology will enable the company to further rely on technology iteration to improve its share and bargaining power in overseas markets and ensure its stable profitability, On the other hand, the new generation technology may enable the atomized e-cigarette to further improve the overall suction feeling when the tobacco oil meets the Chinese standards, and the development space of the industry is expected to be opened and the pattern is expected to be further optimized. In terms of HNB sector, China’s HNB industry as a whole is still expected to develop well in the future, and is still in the policy waiting period.
Papermaking: overhaul & shipping aggravates the supply pressure of raw materials and pushes up the pulp price. Weak demand leads to poor price increase, waiting for the peak season. 1) Operating angle: the operating rates of coated paper and double offset paper were + 1.24% and + 1.28% month on month, the operating load rate of white cardboard industry was – 0.70% compared with last week, and the operating rates of box board corrugated paper were – 0.92% and + 4.31% month on month respectively. 2) Inventory angle: the inventory days of coated paper and double offset paper are + 0.10% and – 0.56% respectively, the inventory of white cardboard is + 0.12%, and the inventory of box board corrugated paper is + 5.76% and + 4.31% respectively; 3) Cost side: Maintenance & shipping intensifies the pressure on the supply side. Wood pulp futures drive the spot price upward. The current price of coniferous pulp is 1100 yuan / ton higher than the lowest point in 21 years. Strong cost support and weak demand lead to poor price increase, and short-term paper enterprises or profits continue to be under pressure.
Pet sector: export Q4 is affected by the exchange rate, shipping, Southeast Asia capacity epidemic and shutdown, and the revenue & performance is under pressure. It is expected that the adverse factors of export will be gradually removed from 22 years, and the new capacity will contribute to the performance increment; Affected by the growth of e-commerce market, the growth rate of China’s independent brands has slowed down. Zhongchong and Patty have combed their brands during the adjustment period, forming a clear brand matrix. They are ready to restructure in 22 years and are optimistic about the rise of domestic pet brands with independent production capacity advantages.
Investment advice
Home furnishings: recommend Oppein Home Group Inc(603833) (Integrated Business & platform), Jason Furniture (Hangzhou) Co.Ltd(603816) (concentration 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 and repair).
Electronic cigarette: recommended by Warburg International (China’s traditional flavor industry, leading in the field of HNB flavor and thin film, next year, overseas business is expected to take the lead and China will have huge space after opening up in China.
Papermaking: it is suggested to pay attention to Xianhe Co.Ltd(603733) with smooth medium-term growth logic (the project progress in Guangxi has been announced recently, the new pulp and paper project has passed the energy assessment, the forest land circulation has been smoothly promoted, the signing of Laizhou project is expected to increase the performance in 22 years, and the compound growth rate of the main industry is expected to be 25% from 2022 to 2024).
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 rising range and time of chemical raw material prices exceeded expectations; The exchange rate fluctuated sharply.
