[matters]
On the evening of January 16, the company issued a [positive profit Forecast] saying that based on the company's management accounts for 2017 and other information currently available, it is expected that the consolidated profit attributable to shareholders for the whole of 2017 will increase by about 200% compared with the same period last year.
The company believes that the substantial increase in the net consolidated profit is mainly due to the increase in the sales price and gross profit of paper products, as well as the increase in government subsidies.
The actual final results of 2017 are still under examination and approval, and this profit notice has not been confirmed, reviewed or reviewed by the auditors of the Company or reviewed by the Audit Committee of the Company. The company expects the 2017 annual report to be published in March 2018.
[comments]
Sunshine Paper is one of the key targets for the overseas raw materials industry of Oriental Fortune Securities in the fourth quarter of 2017.
We are strongly optimistic about the future development opportunities of the company, mainly supported by the following logic: 1) Sunshine Paper has an annual paper production capacity of about 1.3 million tons, which has a leading position in China's (coated) white cow jam market segment. And has become the world's most advanced pre-printing product base. Its "Shanghai King's Industry" original Internet packaging platform model, the integration of national packaging factory resources, in the future to help the company transform and upgrade into a new concept packaging provider. 2) the new policy brings long-term opportunities. Many factors such as environmental protection policy, waste paper import quota management, sewage permit, government subsidy and so on are directly beneficial to the large-scale paper mills with large inventory and strong bargaining power. "strong Hengqiang" leading paper companies are expected to continue to improve their profits and market share. 3) in the future, the exuberant demand for high-end packaging and the improvement of enterprise share will usher in the "double-click" of performance, the company's industry-wide integrated layout and profit is sustainable, and the prospect should not be underestimated.
The performance is expected to increase by about 200% in 2017. Due to the increase in the sales price and gross profit of paper products, as well as the increase in government subsidies, the company expects the net profit attributed to the parent company to increase by about 200% year-on-year in 2017, to about 369 million yuan. We have calculated the real-time gross margin of paper products of the company in the second half of 2017. Based on a 15% increase in the price of the product portfolio and a 20% increase in waste paper costs, we predict that the real-time gross profit per ton is about 1100-1200 yuan / ton (987 yuan / ton in the first half of 2017). According to the latest Choice data, as of January 10, 2018, the market price of white cardboard is about 5400 yuan / ton, and that of coated white card is about 5700 yuan / ton.
The quota for importing waste paper in 2018 may be obtained within this month. On December 25, 2017, the Ministry of Environmental Protection announced the list of the first batch of solid waste raw materials import licenses approved in 2018. A total of 15 waste paper utilization enterprises were approved in the first round of the list, with a total approved waste paper import volume of about 2.2657 million tons. Compared with the first batch of last year's list, the number of approved paper enterprises decreased by about 88.46%, and the approved quota of imported waste paper decreased by about 91.33%. We believe that the logic of stricter management of imported waste paper quotas has been verified in practice, and as we judged in the previous period, mixed waste paper has been completely eliminated in the quota approved in 2018. Quota management tends to be strict and the impact of mixed waste paper is eliminated, and the ability of large paper enterprises to control raw materials is further strengthened. In addition, according to our contact with the company, the company expects that its own quota for importing waste paper this year will be obtained within this month.
Based on the above, we will increase Sunshine Paper's net profit to 369 million yuan in 2017, and will not adjust its profit in 2018 and 2019. Maintain Sunshine's "buy" rating with a target price of HK $3.70.
[risk Tip]
The performance is greatly affected by the price changes of raw materials and white cow jam paper; uncertainty of Prince Sunshine's production expansion plan
The risk of China's environmental protection policy, etc.
