Yongxin Co., Ltd. is a leading plastic flexible packaging company. The company has been deeply involved in the field of plastic flexible packaging for 30 years. Its main products are color printing composite flexible packaging materials, vacuum coating, multi-functional films, etc., which are used in consumer fields such as food, daily chemicals, daily necessities, medical protection, etc. Downstream demand is stable, and the company is stable and far-reaching.
Stable performance with long-term high dividends. In '23, the company achieved revenue of 3.379 billion yuan, up 2.3% year on year, net profit to mother of 408 million yuan, up 12.5% year on year. Revenue and net profit CAGR from 17 to 23 were 9.1% and 12.1%, respectively. In recent years, the company has continued to maintain a high percentage of cash dividends to actively give back to investors. The average cash dividend ratio of the company from 15 to 23 was 77.2%, reached 82.6% in 23, and the current dividend rate reached 5.4%, which highlights the investment value.
The company deeply cooperates with major customers, and overseas development & film business growth can be expected. (1) The company has maintained deep strategic cooperation with leading downstream companies such as Erie, Pepsi, and P&G for a long time. The long-term stable development of major customers in the downstream consumer sector has driven the company's own long-term steady growth. (2) The company actively expands overseas markets. The company's overseas revenue in '23 was 380 million yuan, up 7.8% year on year, with a year-on-year increase of 20.3% in the first half of '23. In the future, it is expected to enter overseas markets by entering the global supply chain of multinational companies, and continue to expand overseas markets by establishing overseas offices, agent cooperation, and building HUB warehouses. (3) Film business driven growth: The company's film business revenue CAGR reached 25% from 17 to 23. Under the circular economy trend, there is plenty of space for single-material plastic packaging. With the gradual release of production capacity in the company's film business, the film business is expected to become the second growth pole.
Profit forecasting and investment advice. The company is a leader in plastic flexible packaging and is expanding the film business. The company's net profit is estimated to be 4.7/54/61 billion yuan in 24-26 years. Referring to comparable companies, considering the company's stable demand in the downstream consumer industry, stable long-term business style, stable long-term high dividend return, and long-term growth room for production expansion and product structure upgrade, the company is given a PE valuation of 15 times over 24 years, corresponding to a reasonable value of 11.57 yuan/share, giving it a “buy” rating.
Risk warning. The macroeconomic downturn has led to falling demand, fluctuating raw material prices, increased industry competition, and investment risks in new projects.