What happened: the company disclosed its 2021 annual report that its annual operating income increased by 20.04% year-on-year to 857 million yuan, its net profit increased by 1.69% to 105 million yuan, and non-net profit increased by 1.45% to 102 million yuan. The comments are as follows:

The growth rate of net profit is slower than that of income. In 2021, operating income increased by 20.04% year-on-year to 857 million yuan, while net profit from home increased by 1.69% to 105 million yuan. In the fourth quarter alone, the net profit of homecoming decreased by 15.57% compared with the same period last year.

In the fourth quarter of 2021, the company's operating income was 236 million yuan, up 7.02% from the same period last year; the return net profit was 25.6631 million yuan, down 15.57% from the same period last year; and the non-net profit was 24.4036 million yuan, down 21.02% from the same period last year.

1) income structure. In 2021, the revenue of the new pharmaceutical packaging materials reached 763 million yuan, an increase of 17.44 percent over the same period last year, accounting for 89.06 percent of the total revenue. In terms of products, revenue from soft packaging products reached 616 million yuan in 2021, an increase of 17.15 percent over the same period last year, while revenue from hard packaging products reached 234 million yuan, an increase of 29.08 percent over the same period last year. From a regional point of view, domestic sales revenue in 2021 was 795 million yuan, an increase of 20.28 percent over the same period last year, while foreign sales revenue was 61.97 million yuan, an increase of 17.11 percent over the same period last year. 2) period fee. In 2021, the company's sales expenses were 42.56 million yuan, down 16.48% from the same period last year; management expenses were 59.3 million yuan, up 16.44% from the same period last year; and financial expenses decreased by 84.33% to 2.27 million yuan from the same period last year, mainly due to the impact of changes in exchange gains and losses in Shanghai Haishun. In 2021, the company invested a lot in R & D, and the R & D expenditure increased by 35.33% to 32.88 million yuan compared with the same period last year.

The company plans to issue convertible bonds to raise no more than 633 million yuan for aluminum-plastic film projects and functional polyolefin film materials projects. On March 27, 2022, the company issued a plan for convertible bonds, with a total amount of no more than 633 million yuan. In addition to 110 million yuan for replenishing working capital, other funds will be invested in aluminum-plastic film projects and functional polyolefin membrane projects. The planned investment amount of the project is 3.26yuan and 197 million yuan respectively. According to the feasibility analysis report on the use of convertible bond funds, the total investment of the aluminum-plastic film project is 464 million yuan, the difference is raised by the company itself, the construction period of the project is 36 months, and the internal rate of return (after tax) of the investment after the project reaches production is 25.14%. The investment payback period (including construction period) is 6.40 years, with an annual output of 120 million square meters of high barrier functional aluminum-plastic film. The total investment of the functional polyolefin membrane material project is 239 million yuan, the construction period of the project is 24 months, the internal rate of return (after tax) of the investment after the project reaches production is 24.03%, and the investment payback period (including construction period) is 5.96 years. It can produce 30,000 tons of functional polyolefin membrane materials per year.

Based on the original production technology of pharmaceutical packaging materials, the company actively develops new consumption and new energy fields, including cheese stick packaging, e-cigarette packaging, lithium battery flexible packaging and so on. The company continues to break the applicable boundary of product technology, using multi-layer co-extrusion high barrier technology, precision coating technology, composite cold forming technology, etc., to develop new products such as high barrier and easy-to-peel thermoplastic sheet, corrosion-resistant lithium battery aluminum-plastic film, applied in new consumption, new energy and other fields, to provide new power for the company's sustainable development. The company makes full use of the good brand image and strong technical development ability to extend upward to the end of the base film material and expand the new application scene downwards. Enter the fields of liquid drug packaging, high barrier recyclable packaging, cheese stick packaging, e-cigarette packaging, lithium battery flexible packaging and so on, and cultivate new profit growth points based on products.

Investment advice: rising raw material prices drag down net interest rates, issue convertible bonds to expand production capacity, and maintain overweight ratings. It is estimated that the company's net profit in 2022-2024 will reach 1.42,1.80 and 225 million yuan respectively, an increase of 36%, 27% and 25% over the same period last year, corresponding to the PE valuation of 31, 25 and 20 times. Policies such as consistency evaluation, volume procurement and related review bring new opportunities to the pharmaceutical packaging industry. The concentration of domestic pharmaceutical packaging industry is low, and there is much room for improvement compared with overseas. The company's products are divided into two categories: soft packaging and hard packaging, with a compound income growth rate of 19% in the past five years. The company's competitive advantages include: customer resources, R & D innovation, product quality, team and management advantages. The capacity reserve is sufficient, and the first and second phases of Nanxun have been put into production to release capacity increment. Focus on expanding new consumption, new energy and other packaging areas, is expected to start to contribute income this year and next year.

Risk tips: higher-than-expected prices of raw materials, lower-than-expected business expansion of new consumer packaging materials, lower-than-expected expansion of aluminum-plastic film business, intensified competition in the industry, and so on.