Introduction to this report:
The performance was in line with expectations. On April 19, special paper companies such as Wuzhou issued a new round of Glassin paper price increase letters, with a proposed increase of 500 yuan/ton. The subsequent focus will be on the pace of implementation of price increases and marginal changes in profit margins.
Key points of investment:
The performance was in line with expectations, and the “gain” rating was maintained. The company's performance is in line with expectations. We maintain our profit forecast. The company's 2024-2026 EPS is 1.37/1.75/2.09 yuan. Referring to the industry valuation level, considering the valuation premium given by the company's multi-category trend expansion, the company will be given 14xPE in 2024, and the target price will be 19.2 yuan, maintaining the “gain” rating.
Production capacity has been steadily expanding, and price increases have been implemented smoothly. The 24Q1 company's sales volume is expected to be ~30wt. The year-on-year increase is mainly due to the continued rise in PM10 food cards and the expansion of production capacity for new specialty paper such as digital transfer, drawing paper, and industrial lining paper. The production capacity utilization rate of cultural paper is high, and the supply and demand pattern for specialty paper products such as glassine, heat transfer printing, and drawing paper is good. At the end of March, all digital transfer price increase letters (+500 yuan) were launched for Glacin.
Homemade pulp Q2 is expected to contribute to cost savings. The net profit per ton is estimated at 427 yuan after excluding Longyou in 24Q1, or -79 yuan month-on-month. It is estimated that the main cause is an increase in wood pulp costs. According to Zhuochuang Information, the average external price of 23Q4/24Q1/24M1 coniferous pulp was 784/760/780 US dollars, and the 23Q4 unit price was +71 dollars (about 10%) compared to Q3 compared to Q3. The production capacity of Q1, the 300,000 ton slurry production line at the Jiangxi base is still climbing. It is expected that Q2 will begin to contribute to cost savings, combined price increases, and tons of profit or improvement.
Production capacity reserves are sufficient, and the growth path is clear. It is expected that the first phase of the 4.49 million ton pulp and paper project at the Hubei base will start trial production of 24H1, which will contribute tons of corrugated board production in 2024. The company's total production capacity is expected to double by the end of 2025. At the same time, Quzhou, Hukou, and Hanchuan are developing collaboratively, making complementary use of resource advantages, and a more scientific and reasonable product structure, smoothing the risk of market fluctuations and enhancing profit certainty.
Risk warning: Prices of raw materials continue to rise, downstream consumer demand falls short of expectations, etc.