Key points of investment
The company released a performance forecast. FY24H1 (corresponding to the 23H2 natural year) is expected to achieve profit of 2-4 billion yuan, with a median value of 300 million yuan, an increase of 1,295 billion yuan over FY23H2, and an increase of 1,689 billion yuan over FY23H1. FY24H1's profit has recovered upward month-on-month and year-on-year.
23H2 Demand slowly picks up, profit margins recover
The average price in the 23Q4 boxboard/corrugated paper market was 3843/2927 yuan/ton, up 95 yuan and 163 yuan from the previous month in 23Q3.
In August-October, paper mills and packaging factories had low inventory and double-section order demand, and the price and profit of corrugated board picked up. Demand for orders in November-December was weak, and customers were mainly in need of preparing goods, and prices declined somewhat. Supply in the 24Q1 Spring Festival shutdown and maintenance market decreased, and it is expected that there will be some support for prices and tons of profit. Import shocks have smoothed out, and domestic demand is expected to weaken, and profits or shocks have recovered in 24 years. In 2023, the import volume of boxboard/corrugated paper was 5.32 million tons (+48%)/3.59 million tons (+48% year over year), zero import tariffs were maintained in 2024, and domestic leaders maintained a profit reduction strategy in the industrial chain. In anticipation of weak domestic demand and weak fluctuations in paper prices, the increase in imported paper will tend to smooth out in 2024. The profit and price center is expected to fluctuate with demand fluctuations.
The company's paper production capacity has declined marginally, and the raw material supporting fiber plans have been increased in terms of additional production capacity. In the second half of '23, 800,000 tons of kraft paper, 550,000 tons of cultural paper, and 200,000 tons of chemical pulp were tested in the fourth quarter. It is expected that 600,000 ton pulping lines, 1.1 million tons of chemical pulp lines, and 1.2 million tons of white cardboard at the Beihai base will gradually be put into operation in 24. The company's paper production capacity plan has shrunk slightly or been delayed, supporting wood pulp and wood fiber production capacity plans are rich, and the integrated layout of pulp and paper has been gradually improved, which is expected to support the improvement of the profitability of high-end products.
Profit forecasting and valuation
In the 24/25/26 fiscal year, the company is expected to achieve revenue of 698.68/835.42/87.127 billion yuan, +23%/+4% year-on-year, and net profit of 8.25/16.44/3.440 billion yuan, respectively, +135%/+99%/+109% year-on-year, corresponding to PE 16/8/4X, maintaining a “buy” rating.
Risk warning
The industry is concentrated in production, demand recovery falls short of expectations, import and export policy changes