Deep ploughing tobacco label for more than 30 years, "big packaging + big consumption" two-wheel drive performance, profit margin improvement.
Dongfeng was founded in 1983, deep ploughing industry for more than 30 years, has grown into a tobacco label industry leader, is one of the most complete industrial chain packaging and printing enterprises, with integrated service capacity and scale advantages.
Strategic upgrading in 2016, layout of medicine bags, film business to improve the layout of large packaging, involved in new types of tobacco, dairy products, consumer investment funds and other growth tracks. Profit improvement in 2021, ROE leads the industry.
Large packaging industry: drug bag business has become the second growth curve, functional membrane structure upgrading, production expansion.
Pharmaceutical packaging: according to the data of the Chinese Medicine Association, the market size of medical bags in China reached 10.6% CAGR in 2014-19. The related review policy accelerates the improvement of industry concentration and optimizes production capacity with volume procurement policy.
Dongfeng M & An is involved in the drug bag industry and sets strategic targets in 2020. It plans to achieve 1.2 billion yuan in revenue and 43.8% CAGR in 2024, increasing the proportion to 25%. At present, the industrial layout of Class I pharmaceutical packaging materials has been initially formed. It is expected that with the expansion of production and volume, the gross profit margin will enter the rising channel; basement membrane and functional membrane: under the subsidiary companies focus on the production of differentiated basement membrane and functional membrane, products with structural upgrading + business volume, profitability significantly increased. PVA high resistance film to achieve mass production in 2021, plans to further expand production to achieve capacity reversal, while through the subsidiary integration of the membrane category business to boost the valuation.
Big consumer industry: new business profits are gradually improving, with room for long-term growth.
New tobacco: the whole industry chain focuses on the layout of HNB, taking into account the atomization category, mainly sold to Europe and the United States, Japan, South Korea, Russia and other countries. With the narrowing of losses, HNB policy rules are expected to develop rapidly after landing. Dairy products: has formed fresh milk, pure milk, yogurt, blending dairy products, business losses continue to reduce. Actively solve the bottleneck of fresh milk mass production and have room for long-term growth.
Investment suggestion
The company is the first echelon enterprise in the tobacco label industry, with the advantages of industrial chain and scale, and the layout of high-growth track open for a long time. It is estimated that the 2021-23 net profit will be 6.5x790,000,000 yuan, and the corresponding share price PE will be 2021 times as much as that of 15-12-10. For the first time, it covers giving a "buy" rating.
Risk hint
The risk of sharp fluctuations in raw material prices, the lower-than-expected risk of new business growth, and HNB policy regulation exceeded expectations.