Events:
The company announced three quarterly results: the operating income in the first three quarters of 2012 was 982 million yuan, up 5.8% from the same period last year; the net profit belonging to the owner of the parent company was 67.5 million yuan, down 1.2% from the same period last year.
In the third quarter, the operating income in a single quarter was 320 million yuan, an increase of 6.1% over the same period last year; the net profit belonging to the owner of the parent company was 17.84 million yuan, down 19% from 0.08 yuan in the same period last year.
Comments:
Three quarterly results are lower than expected: we previously predicted that the company will achieve EPS0.10 yuan in the third quarter, which is a big deviation from the results announced this time. As far as we know, it is mainly due to the slowdown in the growth rate of the industry. The relaxation of tobacco demand and the "ceiling price" have a greater impact on the company's revenue: in 2012, the overall economic downturn and market demand slowed down. The cumulative national cigarette production from January to August was 1.7 trillion cigarettes, an increase of only 1.9% compared with the same period last year. The cumulative cigarette production growth rate from January to August 2011 was 3.9% year-on-year, indicating a significant decline in incremental cigarette demand so far this year.
On the other hand, the "maximum price policy" recently implemented by the tobacco industry not only suppresses the production and consumption of sky-high prices, but also leads to the adjustment of the structure of ordinary cigarettes, which has a certain impact on the average price of cigarette paper.
In addition, the implementation of the rolling tobacco bidding procurement policy has further intensified the internal competition in the cigarette paper industry. Affected by unfavorable factors of market demand, the company's revenue in the first three quarters increased by 6% compared with the same period last year, with a slow growth rate.
High permeable paper is basically in line with our forecast and continues to lead revenue growth: combined with our research and disclosure in the China News, filter stick paper continues to lead revenue growth in the company's main business, with a year-on-year growth rate of nearly 20%. It is significantly higher than the growth rate of other cigarette paper and the tobacco industry, and its share in the company's revenue has further expanded to nearly 30%. Among them, it is mainly due to the strong demand for high permeability filter paper driven by tobacco coke reduction policy. It plays a strong role in replacing the ordinary filter stick paper.
The increase in the expense rate during the period is an important reason for the lower-than-expected performance: benefiting from the decline in pulp prices and the increase in the proportion of transparent paper in the first three quarters, the company's gross profit margin rose instead of decreasing (from 24.1% to 25.1%), which had a positive effect on the performance. the important reason for the lower-than-expected income is the increase in the expense rate during the period, which was 15.5% in the third quarter, up 1.5 percentage points from the same period last year. Among them, the rate of management expenses increased by 1.2 percentage points over the same period last year. On the one hand, the reason is the slowdown in income growth, on the other hand, the need for the release of new capacity, economies of scale have not yet shown to increase the rate of expenditure during the period.
Although the fourth quarter is the most prosperous quarter for tobacco, because the results in the third quarter are much lower than expected, it is less likely to achieve our forecast of 0.44 yuan for the whole year. Therefore, we have lowered our annual profit forecast to 0.41 yuan, an adjustment of 8%. In 2013, the company's annual output of 6000 tons of high permeability filter rod molding paper project is about to be completed and put into production, and the production capacity will be concentrated next year, accounting for more than 50% of filter stick paper sales, driving the company's overall performance to achieve rapid growth. in addition, the company's annual production of 17000 tons of Bible paper project has been built and put into production in the middle of the year, which will also become a driving factor for revenue growth in 2013.
Maintain the "buy" rating: although the company's performance in the third quarter was lower than expected, it was mainly influenced by the industry. the reasons why we are optimistic about the company have not changed: 1, the growth rate of transparent paper is still significantly faster than that of the industry and other businesses of the company; 2, the company's outstanding industry leading position and excellent cost control. After re-calculation, the EPS of the forecast company from 2012 to 2014 is 0.40,0.51,0.57 yuan respectively, with a growth rate of 4%, 28% and 12% respectively, and the corresponding PE is 17x, 13x and 12x respectively, maintaining the "buy" rating.
Risk tips: 1, tobacco enterprises bidding makes the price of traditional cigarette paper show a downward trend; 2, fund-raising projects do not meet expectations
