Subdivide the field leader, the second growth curve is clear. Shanghai Elu is the double leader of domestic industrial paper packaging and cheese stick packaging industry. it longitudinally laid out the intelligent packaging system in 2015, extended horizontally to the plastic packaging field in 2017, and opened the secondary growth space into the high-prosperity and high-profit cheese stick packaging track in 2018. In the past five years, the income CAGR was 24.98%, and the profit CAGR was 26.29%. In 2022, the demand was under pressure by the epidemic disturbance, but the long-term growth path was clear.
Cheese bar packaging leads the industry, production and R & D advantages to build the core competitiveness. Cheese stick packaging has a high technical barrier, the company relies on high-quality products and services to accelerate the penetration of downstream customers, deeply binds the cheese leader Miao Ke Landuo, and cooperates with Mengniu, Yili, Dr. Cheese and other well-known brands, with a revenue CAGR of 109.4% from 2019 to 2021. Cheese sticks have broad potential, and room temperature / adult categories will inject new impetus into the industry's growth. Shanghai Elu, as the upstream packaging leader, is expected to benefit first. Under the neutral assumption, the company's cheese bar packaging business income is about 1.4 billion yuan in 2030, and CAGR is 20.0% in 2021-2030.
Industrial paper packaging has a deep accumulation, and the industry scale and market share are expected to rise together. Through automation and large-scale production to reduce costs and increase efficiency, the company continues to take the lead in per capita income and profits, and its profitability is better than that of the same industry; high-quality customers accumulate rich resources, actively expand new gains, and grow steadily, with an income CAGR of 18.3% in 2019-2021; plastic restrictions and bans promote a high demand for "replacing plastic with paper", with broad potential space for paper packaging. Shanghai Ailu, as a leader in the subdivision field, is expected to further increase its market share.
Grasp the profit inflection point and wait for the economy to pick up. 1) Cheese stick packaging: with the slowing down of the price war in the downstream cheese bar market and the improvement of the competition pattern, the company is expected to obtain price support with its own high-quality products and services, and the downstream price reduction space is limited; if demand picks up in 2023 and the volume of new customers will lead to an increase in capacity utilization, profit elasticity is expected to be released. 2) Industrial paper packaging: since 2021H2, the price of raw materials is high, and the weak downstream demand hinders the transmission of price increase, resulting in profit pressure; 2022Q3 paper prices improve year-on-year, follow-up prices fall further, superimposed price increase landing, cost pressure is expected to be alleviated.
Investment rating. We estimate that from 2022 to 2024, the operating income of Shanghai Elu will be 11.9%, 14.3%, 17.0 billion yuan respectively, an increase of 6.0%, 20.2%, 18.8%, and a net profit of 1.09, 172, and 227 million yuan, respectively, and a year-on-year change of-24.9%, 58.4%, 31.8%, corresponding to 33.0X/20.8X/15.8X, respectively. Reference to comparable company 2023 Wind consensus forecast 16 times PE average, taking into account the company's short-term demand pressure, but the medium-term growth curve is clear, profitability is expected to repair, the first coverage, given the "overweight" rating.
Risk tips: poor downstream demand, intensified competition in the industry, customer expansion is not as expected, raw material prices rise, measurement errors.