Domestic metal packaging leader, focusing on the two-piece can market
The company is a leading company specializing in the production of fast-moving consumer goods metal packaging such as food and beverages, including two metal cans and matching easy-to-pull covers, packaging printing iron products and new material packaging. The company continues to promote the "internal and external linkage" internationalization strategy, and carries out production capacity layout in the eastern, southern, northern, central, western, and overseas Malaysia, Cambodia and other places. It has established long-term and stable strategic cooperative relations with domestic and foreign well-known brands such as Coca-Cola Company, PepsiCo Inc, Snow, Carlsberg, Budweiser, Tsing Tao Beer, Wang Laoji and so on.
Revenue is growing steadily and profitability is expected to improve
In 2022, the company's revenue was 8.543 billion, year-on-year + 22.60%; net profit was 268 million,-0.76% year-on-year, and profitability was slightly under pressure. In 2022, the revenue of two-piece cans was 7.71 billion, which was + 29.99% compared with the same period last year, accounting for 90.25%. The revenue of Indian iron was 806 million, which was-21.86% compared with the same period last year, accounting for 9.43%. By region, sales revenue in 2022 is 6.773 billion, year-on-year + 18.44%; export revenue is 1.743 billion, year-on-year + 40.10%. High export growth is promoted by new projects such as Lanzhou and Malaysia.
The supply and demand pattern of the industry is optimized, and the fundamentals are booming.
Since 2016, domestic two-piece can enterprises have accelerated the integration of mergers and acquisitions, the improvement of supply and demand pattern, the optimization of competition pattern, and the further enhancement of industry concentration. According to the Metal Container Committee of China Packaging Federation, China's food and beverage metal packaging industry will achieve a total output of 119 billion cans in 2022, of which two-piece cans will reach 56 billion cans, accounting for about 47.06%. In China, the greatest demand for two-piece cans is beer packaging, and the domestic demand for two-piece cans accounts for about 56.4% in 2019. In 2022, the beer canning rates of the United States, the United Kingdom and Japan were 72.3%, 65.5% and 90.0% respectively, and the beer canning rate of China was 27.1%. Compared with other developed countries, there is much room for improvement. We expect that the increase in beer canning rate in China will drive the overall expansion of the two-piece can industry.
Business layout continues to expand, and the transformation of digital intelligence is accelerated.
1) the company deeply binds downstream major customers, and has established long-term and stable cooperative relations with Coca-Cola Company, PepsiCo Inc, Budweiser, Snow, Yanjing Beer, Tsing Tao Beer, Wang Laoji and other major customers, while constantly opening up new customers, in addition to the existing B2B business model, actively explore new models such as B2C. 2) the company has set up production bases in all parts of the country, and the capacity layout has been continuously optimized; from 2020 to 2022, the company has built new production bases in Malaysia and Cambodia, and actively expanded overseas production capacity. 3) since June 2022, the raw material prices of aluminum ingots and tinplates have stabilized, and we expect the two-piece gross interest rate of the medium-and long-term company to be repaired. 4) the company accelerates the transformation of digital intelligence, attaches importance to product research and development, and completes many technologies such as film-coated iron forming, digital printing and molding of flat metal packaging materials, material thinning molding and new can development in 2019, which is at the leading level in the industry.
Coverage for the first time, giving a "buy" rating
The company is a leading domestic metal packaging enterprise, focusing on the domestic two-piece can market for a long time. In recent years, the business layout continues to expand, and the transformation of digital intelligence is accelerated. We estimate that the company's EPS from 2023 to 2025 will be 0.27 yuan per share and 0.33 yuan per share, respectively, and its net profit will be 3.05 yuan per share, an increase of 13.5%, 22.9% and 12.5% respectively over the same period last year. Cover for the first time, giving a "buy" rating.
Risk tips: macro environment and policy change risk; raw material price fluctuation risk; downstream demand pressure; high customer concentration risk.