Main points of investment

On August 15, the company disclosed 23H1 performance: 2023H1 income 3.449 billion yuan (year-on-year-9.60%), return-50.32 million yuan (year-on-year-133.65%), non-return net profit-59.83 million yuan (year-on-year-141.15%).

23Q2 income is 1.823 billion yuan (year-on-year-13.03%), return net profit is-58 million yuan (year-on-year-152.35%), deducting non-return net profit-67 million yuan (year-on-year-160.48%), Q2 profit hit bottom, H2 is expected to improve.

Q2 high cost-paper price decline profit pressure, H2 paper price repair-using low-cost pulp to recover the expected price end, 23Q2 cost overspeed drop-weak demand, white card price drop offset cost improvement, white card prices have been set up one after another since July, part of the transmission landing, H2 price is expected to be moderately repaired; Q2 thermal paper, thermal sublimation transfer paper prices declined in varying degrees, some transfer paper manufacturers released price increase letters in August, Q3 or hit bottom rebound. On the cost side, Q2 still consumes part of the stock of high-priced pulp, and the release of cost dividend is not significant. Considering pulp inventory and purchasing cycle, it is expected that Q3 can concentrate on over-falling low-priced pulp, and ton profit scissors will expand quarter by quarter. In terms of sales volume, 23H1 domestic and foreign demand is sluggish, export high gross margin orders decreased, with the completion of the revision of the cigarette label QR code, H2 cigarette card volume returned to growth, terminal consumption repair to meet the packaging season, overall product sales improvement is expected, comprehensive performance is expected to pick up quarter by quarter.

Profit margin declined month-on-month, expense rate stable, cash flow ratio improved (1) profit margin: 23Q2 achieved a gross sales margin of 2.66% (year-on-14.77pct, month-on-7.34pct), net sales margin of-8.40% (year-on-15.79pct, month-on-month-8.62pct), profit margin downward month-on-month, mainly due to varying degrees of decline in product prices and cost improvement is sometimes lagging.

(2) period expense rate: the 23Q2 period expense rate is 9.57% (year-on-year + 1.48pct, month-on-month + 0.18pct), of which the sales expense rate is 1.09% (year-on-year, month-on-0.06pct), the management and R & D expense rate is 8.76% (year-on-year + 1.43pct, month-on-month + 0.27pct), and the financial expense rate is-0.28% (year-on-year + 0.05pct, month-on-month-0.03pct), mainly due to the appreciation of the US dollar and the adjustment of foreign currency asset structure. More exchange gains are generated.

(3) operating efficiency and cash flow: 23Q2 company accounts receivable and bills 929 million yuan (year-on-year + 37 million yuan, month-on-month-25 million yuan), accounts receivable turnover days 47.49 days (year-on-year + 8.31 days, month-on-month-3.57 days), notes and accounts payable total 1.301 billion yuan (year-on-year-147 million yuan, month-on-month + 291 million yuan) Inventory of 1.326 billion yuan (233 million yuan compared with the same period last year, month-on-month-149 million yuan). Inventory turnover days are 67.04 days (year-on-year + 13.13 days, month-on-month-11.74 days). In terms of cash flow, 23Q2's net operating cash flow is 244 million yuan (year-on-year-48 million yuan, month-on-month + 828 million yuan).

Differential special paper leader, orderly expansion of pulp and paper production capacity is expected to smooth periodic fluctuations the company plans 300000 tons of white cardboard paper / 60,000 tons of special paper is expected to be put into production in mid-24 / 24 respectively, the company acquired 100% stake in Zhanjiang China Paper in June 23. Zhanjiang China Paper high-end packaging new materials project has won environmental assessment, energy assessment, 612,000 tons of chemical pulp is expected to start construction by the end of 23, self-owned pulp line will effectively smooth cycle fluctuations.

In addition, the company's R & D investment in the leading industry, the launch of carbon fiber paper, reverse osmosis membrane substrate, digital white ink hot stamping film and other new products, which is expected to contribute to new profit growth in the future.

Profit forecast

We estimate that the company's operating income for 23-25 is RMB 77.07 / 98.96 RMB 10.761 billion, which is-4.69%, 28.40%, 8.74%, and 604 million yuan, respectively, year-on-year, and the year-on-year net profit is-15.12%, 54.46%, 18.94%, respectively, corresponding to EPS 0.18, 0.27, 0.33 and PE 2013, respectively, maintaining the "holding increase" rating.

Risk hint

The risk of large fluctuation of product price; the risk of less than expected demand repair; the risk of large fluctuation of pulp price.