Profit is lower than expected

In this quarter, the company realized operating income of 680 million yuan, down 14.5% from the same period last year; realized operating profit of 32.35 million yuan, down 44.0% from the same period last year; and realized net profit of 30.82 million yuan, down 31.8% from the same period last year. The decline in profit is mainly caused by the decline in sales revenue and the overall increase in expense rates.

The downturn in the industry makes sales difficult

Sales in the quarter were the lowest in the last seven quarters, showing a month-on-month decline in the previous quarter, and a further decline in the quarter indicates a strengthening of the impact of the industry downturn. The relevant financial data also reflect the company's sales difficulties: 1) the cash income from product sales decreased by 370 million yuan or 30.9% from the previous month; 2) inventory increased by 210 million yuan or 51.6% from the previous month, minus 95.23 million yuan from the purchase of raw materials in the current period, and the product inventory increased by 120 million yuan, equivalent to a reduction of about 35000 tons of products, affecting the operating rate by 11 percentage points for 1.17 million tons of production capacity.

During the period, the expense rate increased significantly, and the operating efficiency decreased.

In this quarter, the company's sales expense rate, management expense rate and financial expense rate were 3.7%, 2.9% and 4.6% respectively, an increase of 0.2%, 0.7% and 0.9% respectively over the same period last year. In addition, the turnover of inventory and accounts receivable was 66 days and 85 days, respectively, for a total of 151 days, a decrease of 8 days, an increase of 19 days and an increase of 11 days respectively over the same period last year.

Risk hint

The progress of the project of private placement of household paper is lower than expected, and the progress by the end of last year was only 5.4%; the surplus in the industrial packaging paper industry is expected to continue.

Downgrade earnings forecast and maintain "neutral" rating

Before it is still unclear when the 68000 tons of household paper project will achieve a stable return, and under the background that it is difficult to reverse the trend of the industry, the company's profit growth in the next two years will mainly be driven by the gradual production of the 250000 ton white-faced cow card project. the decline in sales in the first quarter led us to adjust our sales to 85x96 / 1.08 million tons from 2012 to 2014 (originally expected to be 97 tons 107 / 1.17 million tons). Furthermore, the EPS is adjusted to 0.26 Universe 0.38 Universe 0.41 yuan (originally expected to be 0.33 Placement 0.44 Universe 0.48 yuan, this time the adjustment is-21% Universe 13% Universe 14%), and the Pmax E is 26 18max 16x, the valuation level is relatively high in the current paper industry, maintaining the "neutral" rating.