Brief comment on performance
On October 29, the company released a three-quarter report that 3Q achieved 8.589 billion yuan in revenue, + 1.36% year-on-year, 161 million yuan in net profit,-71.22% in the same period last year, 25.762 billion yuan in revenue in the first three quarters, + 16.71% in the same period last year, and 2.182 billion yuan in net profit in the first three quarters, + 102.71% in the same period last year, and the performance was lower than expected.
Business analysis
Paper prices affected by the off-season high decline, ton gross margin month-on-month & year-on-year decline. 3Q revenue year-on-year + 1.4%, month-on-month + 23.3%; gross profit margin 15.25%, year-on-year-8.91pct, month-on-month-18.39pct. 1) in terms of price, the downstream demand has entered the off-season-the price of culture / white card has fallen since April under the cycle of decline in raw material prices. The price of 3Q double glue / coated paper / white card paper is 5460max 6,200 yuan / ton (before tax), compared with-1200Universe 1400Universe 2940 yuan / ton, compared with the same period last year. 370 yuan / ton. 2) from the point of view of sales, 3Q is expected to accelerate inventory elimination, shipments are higher than the previous month, and 3Q book inventory is-940 million yuan.
3Q . 3) in terms of cost, it is expected to be mainly affected by the rising cost of wood chips, freight and energy consumption costs, and the gross profit per ton of paper products of 3Q company is expected to decline compared with the same period last year and month-on-month.
Profitability is under pressure, and financial leasing business continues to compress. 3Q net interest rate year-on-year-5.92pct, month-on-month-11.06pct. Among them, the rate of management & R & D / financial expenses is 8.1% from + 0.55/+0.85pct to 7.1% compared with the same period last year.
At the end of September 2021, the scale of financial leasing assets is expected to decline by 1.6 billion yuan compared with the beginning of the year, and the proportion of financial leasing assets in total assets is expected to further decrease.
4Q power restriction is expected to catalyze replenishment and pay attention to the marginal change of demand. Under the expectation of 4Q production restrictions, the inventory has been accelerated, and the operating rate has also dropped to a historically low level. At present, the culture has stopped falling and the price of white cardboard is at the bottom. We expect that in the short term, it is still necessary to observe the marginal changes in downstream demand and whether the impact of power cuts in the fourth quarter on industry capacity is higher than expected. From a medium-and long-term point of view, with the start of Huanggang Phase II 1.5 million-ton paper production line (cultural paper, white cardboard) and 520000-ton mechanical pulp project, the company's market position is expected to be further stable.
Profit forecast and investment advice
Considering the current price trend of pulp paper and the supply and demand pattern of the industry next year, we downgraded the EPS in 2021-2023 to 0.78,0.54,0.78 yuan, by 28.4%, 46.3% and 26.5%. The current stock price corresponds to 9 times, 13 times and 9 times of PE respectively. Downgrade to "overweight" rating.
Risk hint
The risk that the progress of the new production capacity is not as expected; the impact of the double reduction policy of education on the demand for cultural paper; the risk of large fluctuations in the price of raw materials
