Overview of events

According to the company's semi-annual report of 2023, the revenue of H1 company in 2023 was 3.449 billion yuan,-9.6% compared with the same period last year; the net profit from returning to the mother was-50 million yuan,-133.65% from the same period last year; and the net profit after deducting non-return was-60 million yuan,-141.15% from the same period last year. In terms of cash flow, the net cash flow generated by operating activities was-340 million yuan, compared with-155.83% in the same period last year. In a single quarter, Q2 achieved revenue of 1.823 billion yuan in 2023,-12.91% of the same period last year, and net profit of-58 million yuan,-152.35% of the same period last year.

Analysis and judgment:

Revenue side: some business demand has increased.

During the reporting period, the volume of express delivery business in China exceeded 60 billion pieces, and the business income exceeded 550 billion yuan, an increase of about 17% and 11.5% respectively over the same period last year. The scale of the industry has grown steadily, and the business volume has exceeded 10 billion yuan per month. With the upgrading of domestic consumption, the demand for labels in Shang Chao, cold chain, e-commerce and other industries has increased, which will effectively drive the continuous growth of the demand for label thermal paper and self-adhesive products. In addition, in 2023, H1, the cumulative sales of lottery tickets nationwide totaled 273.899 billion yuan, an increase of 50.4 percent over the same period last year, and the demand for lottery thermal paper operated by the company also increased significantly. In terms of white cards, the market demand for social white cards recovers slowly, the market price of ordinary social cards drops rapidly, and the high-end social cards are also affected to a certain extent, and the market demand is weak. But in the long run, with the continuous improvement of residents' income level, the further enhancement of consumption capacity, and the accelerated pace of consumption upgrading, daily social card packaging such as cosmetics and drugs has gradually transformed to high-end, exquisite and functional packaging. in particular, the demand for anti-counterfeiting of cosmetics and drug packaging is increasing day by day, and the market of high-grade social white card paper is expected to maintain a rapid growth rate in the future.

Profit side: affected by the inventory cycle, pulp costs are still high in the first half of the year and are expected to improve significantly in the second half of the year.

In the first half of 2023, the price of pulp, the main raw material of the company, declined significantly, but due to the purchasing and transportation cycle of imported pulp, most of the pulp used in the first half of the year were high-priced pulp purchased last year, and the problem of high cost has not been significantly alleviated. At the same time, domestic and foreign demand is not strong, the company's high-grade coated white cardboard and specialty paper prices are in the downward cycle, the company's profit level is under pressure. We expect that the company's high-priced stock of wood pulp has been basically digested, and the cost side will improve significantly in the second half of the year. At the same time, the overseas Easter and Christmas purchasing season is approaching, which is also conducive to the recovery of overall demand in the industry. The company's profitability will be greatly improved in the second half of the year.

Buyback shows the confidence of the company.

The announcement of the company on July 29, 2023 is called safeguarding the interests of the broad masses of investors, especially medium and small investors, enhancing the confidence of investors, and promoting the long-term and stable development of the company. It plans to use its own funds to buy back the company's shares by means of centralized bidding transactions, the total amount of repurchase funds is not less than 200 million yuan (inclusive) and not more than 400 million yuan (inclusive), and the repurchase price does not exceed 5 yuan per share (inclusive). According to the total repurchase capital of 200 million to 400 million yuan and the maximum repurchase price of 5 yuan per share, the estimated number of repurchased shares is 4000 to 80 million shares, accounting for about 2.16% of the company's total share capital. 4.33%. All the shares repurchased will be used to write off and reduce the registered capital. We believe that this buyback demonstrates the confidence of the company's management in the future operation of the company.

Investment suggestion

We are optimistic about Guanhao high-tech, the company as a leading enterprise in the specialty paper industry, the product line mainly includes special paper, self-adhesive labels and special white cardboard. In the short term, we expect that the company's high-price stock of wood pulp has been basically digested, which is good for the rapid repair of the company's profits in the second half of the year. In the medium and long term, the company's specialty paper business and white card business will benefit from the company's own capacity expansion and increased share in the high-quality customer supply system. We maintain the company's profit forecast that the company's revenue for 23-25 is expected to be 81.2 million, EPS is 0.21, 0.32, and PE is 17.17, 11.12, 9.16 times the closing price of 3.61 yuan per share on August 15, 2023, maintaining the company's "buy" rating.

Risk hint

1) Macroeconomic fluctuations lead to lower-than-expected downstream demand. 2) the construction of new projects has a certain construction cycle, which may be affected by macroeconomic changes, intensified industry competition, industrial policy changes and other related uncertain factors in the project construction process. 3) there is some uncertainty about the acquisition of Zhanjiang China Paper.