Endogenous epitaxy establishes the leading position of vacuum aluminized paper and continues to expand new business.
The company is a leading enterprise in the domestic vacuum aluminized paper industry, mainly engaged in R & D, manufacturing and sales, including vacuum aluminized paper, white cardboard paper, coated paper and other packaging materials. In 2012, the company acquired 85% stake in Fujian Taixing Special Paper Co., Ltd., establishing the company's leading position as a domestic vacuum aluminized paper manufacturer. In 2013, the company established Shanghai Luxin Electronic Technology Co., Ltd. to invest, produce and sell e-cigarettes. In addition, the company also actively develops three-dimensional free-forming environmental protection packaging materials, microstructure optical packaging materials, organic fertilizer products and soil remediation and treatment business, and broadens the field of layout.
Industry trend: the adjustment of cigarette product structure, the improvement of cigarette label market concentration, and the vigorous development of new tobacco
As an important business of the company, cigarette packaging is highly related to the cigarette market. As the State Tobacco Administration has put forward higher requirements for the capital, technology, quality control and innovation ability of tobacco label enterprises, head and technological innovative enterprises are conducive to meet the needs of industry development in the market competition. the company is expected to increase its market share by virtue of its leading position in the industry. At the same time, under the influence of strengthened cigarette control and increased health awareness, new tobacco products have grown rapidly in recent years, among which IQOS developed by Philip Morris International has exploded the market, and the global market share of IQOS has reached 1.7% as of 2018 Q3. The document of the State Tobacco Monopoly Bureau points out that it is necessary to promote the study of policies and regulations on the regulation of new tobacco products.
The advanced technology of packaging and printing business has been recognized by customers at home and abroad, and the new tobacco products are ahead of the overseas test.
The company's packaging business is in a leading position in the industry, and is recognized by customers at home and abroad, serving domestic middle and high-end cigarette brands, and establishing trade relations with PT Djarum (the third largest tobacco company in Indonesia), Australia Amcor Group, Japan Tobacco International, Dubai Tobacco and other companies. Strategic layout of a new type of tobacco, products leading overseas test water. As early as 2013, the company established Shanghai Luxin Electronic Technology Co., Ltd., a joint venture with Dongfeng Co., Ltd., engaged in the R & D and manufacturing of e-cigarettes, leading the industry layout. The company won the core patent of low temperature non-combustion in 2014, and launched IQOS compatible smoking set MOX Edge in 2017 to enter the Japanese market. In 2018, the company's Hong Kong Green Harvest acquired a stake in Cambodian cigarette manufacturer SINO-JK100% to promote the development, production and sales of new non-burning tobacco products with heated content. The company has a leading and comprehensive layout in the field of heating and non-burning, and once it has both smoke cartridges and smoking sets, the company is expected to become the second Philip International to launch products similar to IQOS, taking advantage of the rise of heated and unburnt tobacco. In addition, recently, the company's wholly-owned subsidiary won the "Yunnan Industrial Hemp planting license" to lay out the new business of industrial marijuana.
Profit forecast and investment suggestion
We estimate that in 2018-20, the company will achieve revenue of 2.295,2582 million yuan, net profit of 1.044 million yuan, an increase of 0.95 percent, 26.29 percent, 24.90 percent year-on-year growth of 0.95 percent, 26.29 percent, 24.90 percent / year-on-year, and an EPS of 0.15, 0.19, 0.23 yuan, respectively, and the PE of the stock price before that is respectively times that of 34-27-22. Considering the company's future performance in the new tobacco field and developing industrial marijuana planting business, the company will be given a 30-fold PE in 2019, with a target price of RMB5.7. for the first time, it will be given an "overweight" rating.
Risk hints: cigarette market industry adjustment risk, raw material price fluctuation risk, goodwill impairment risk, new tobacco policy change risk, industrial marijuana policy change risk; resolutely oppose drug marijuana