Incidents:
The company released its 2021 annual report: revenue for the full year of 2021 was 33,020 billion yuan, an increase of 7.43% over the previous year; realized net profit of 2,066 billion yuan, an increase of 20.65% over the previous year; realized net profit of 1,744 billion yuan after deducting non-Gumo's net profit, an increase of 55.83% over the previous year; and basic earnings per share of 0.56 yuan.
Guoyuan's opinion:
Fluctuations in paper prices put pressure on performance in the second half of the year. The financial leasing scale continued to reduce the company's mechanical paper production by 5.5 million tons (-4.68%) and sales volume of 5.45 million tons (-2.85%) in 2021, achieving revenue of 33,020 billion yuan (+7.43%) and net profit of the mother of Guimo of 2,066 million yuan (+20.65%).
On a quarterly basis, Q1-4 companies achieved revenue of 102.06/69.67/ 85.89/7258 billion yuan, respectively, +67.71%/-7.28%/+1.36%/-16.22%; achieved net profit of 11.79/8.42/1.61/-117 million yuan, +481.42%/-71.22%/-118.38% over the previous month, +85.54%/-28.59%/-80.59%/-80./ -172.45%, subject to the paper price stage The impact of sexual fluctuations. Looking at the paper business, white cardboard/double coated paper/coated paper/anti-stick base paper achieved revenue of 95.80/7287/43.11/1,168 billion yuan, an increase of 21.25%/5.91%/4.26%/4.42% over the previous year, and electrostatic paper revenue fell 482% year on year to 3.857 billion yuan. Furthermore, the company continued to reduce the scale of its financial leasing business, achieving revenue of 327 million yuan (-65.03%), accounting for 0.99% of total revenue (-2.05pcts), and net recovery of 1,153 million yuan.
Profitability remains stable, and cost rate levels continue to be optimized
Although paper prices fluctuated greatly throughout 2021, compounded by factors such as weakening demand and marginal increase in cost pressure in the second half of the year, the company's overall profitability remained stable. The company's comprehensive gross margin increased 0.54 pcts to 23.61% year-on-year, and net interest rate increased 0.13 pcts to 6.33%. On a quarterly basis, Q1-4 gross margins were 29.08%/33.64%/15.25%/16.20%, respectively, and +0.84pcts/ +11.07pcts/-8.91pcts/ -2.61pcts, respectively. By product, the gross margins of white cardboard/double coated paper/coated paper/electrostatic paper were 31.72%/17.60%/27.38%/18.57%, respectively, compared to +4.68pcts/-0.16pcts/+6.07pcts/-2.56 pcts. In terms of the cost rate for the period, the sales expenses rate/management expenses ratio decreased by 0.08 pcts/0.48 pcts to 0.89%/2.85% year on year, and the R&D expenses ratio increased by 0.26 pcts to 4.40% year on year. The reduction in the scale of financial leasing has achieved remarkable results. Interest expenses as a share of total revenue fell 2.15 pcts to 8.02% year on year, and the financial expense ratio fell 1.11 pcts to 7.23% year on year. The company is expected to continue to optimize financial expenses by optimizing financing channels. By the end of 2021, the book balance of financial leases was 8.344 billion yuan, and the company's debt fell -8.33% year-on-year.
The integrated strategy for pulp and paper continues to advance, adding production capacity to support long-term growth in performance. The company's business strategy to reduce financial leasing business is progressing steadily, focusing on deepening the paper industry. The company accelerates the integrated strategy of pulp and paper, and continues to increase the self-sufficiency rate of wood pulp to strengthen its cost advantage. Its own cyclical properties may gradually weaken. By the end of 2021, the company's wood pulp/machine paper production capacity reached 430/6.8 million tons, and construction of the Huanggang Chenming Phase II project has begun. After completion, it is expected to add 1.5 million tons/year of paper production capacity and 520,000 tons/year of mechanical pulp production capacity, which will consolidate the company's leading position in pulp paper. In the context of production restrictions, supply contraction will speed up inventory removal. The mismatch between supply and demand will drive a continuation of the recovery trend of paper prices in the short to medium term in the future. Combined with the further release of the company's production capacity, the tonnage level is expected to improve month-on-month.
Investment advice and profit forecasting
We believe that as the scale of the company's financial leasing business continues to shrink and the capital structure is optimized, as a leader in pulp and paper integration, the pace of production capacity expansion is clear, and the medium- to long-term market share is expected to increase steadily. We adjusted our profit forecast. We expect the company to achieve revenue of 358892/383.18/41,2465 billion yuan respectively in 2022-2024, net profit of 22.37/24.73/2,855 billion yuan, EPS of 0.75/0.83/0.96 yuan, and corresponding PE of 8.8/8.0/6.9 times, maintaining the “increase in holdings” rating.
Risk warning
Prices of raw materials have fluctuated greatly; demand growth has fallen short of expectations; and the pace of new production capacity has fallen short of expectations.