Incident: On April 23, the company announced an employee stock ownership plan, involving 257 people (no more than), including directors, supervisors, and core executives, with a size of no more than 2,4347 million shares (accounting for 0.73% of the total share capital), and the purchase price was 13.23 yuan/share (60% of the stock price on the 1st day before the announcement). In this shareholding plan, the subscription share of key employees reached 69.6% (14.9% of directors and supervisors/15.5% reserved). In addition, individual performance assessments can unlock 100% of the subscription share by reaching the qualification level (there are good, excellent, etc.), employees can fully enjoy the company's growth dividends, and talent binding is strengthened.
Orders are saturated and the price market is stable. The company is on the middle and high-end circuit, has an excellent layout, and continues to optimize the product structure and promote new products to maintain the price market. The average price of H1 is expected to remain stable. In terms of sales volume, the company is expanding overseas markets with excellent product strength, and domestic sales continue to seize share. It is expected that production and sales are currently saturated. In terms of cost, titanium dioxide has been rising recently, and the company is expected to stock up early and have limited impact; low-price wood pulp inventory is gradually being consumed. The Q1-Q2 cost side is expected to increase slightly month-on-month, and the profit per ton is expected to decline slightly. Furthermore, the wood pulp trade is expected to benefit from a recovery in pulp prices and contribute part of the profit.
The product structure is expanding, and there is plenty of room for growth. In June 2023, the company successfully implemented an additional production capacity of 80,000 tons of decorative base paper, with a design capacity of 350,000 tons. We expect the company's production and sales volume to reach about 300,000 tons in 2023. Looking forward to the future, the company still has 400,000 tons of specialty paper production capacity to be released (including decorative base paper). It is expected that additional production and sales will reach 6-8 thousand tons in 2024. The new production capacity will be implemented in an orderly manner in 2025, and it is expected to enter specialty paper for food, medicine, industry, etc., and the growth path is clear.
Investment rating: The company's net profit for 2023-2025 is estimated to be 570 million yuan, 6.5 million yuan, and 740 million yuan, respectively, corresponding to PE valuations of 12.8X, 11.2X, and 9.8X, maintaining a “buy” rating.
Risk warning: Costs fluctuated beyond expectations, demand recovery fell short of expectations, and the competitive landscape intensified.