Excellent domestic specialty paper companies have steadily improved their business performance. The company independently developed and produced the first coated white cardboard for cigarettes in China, filling the gap in the domestic white cardboard market and starting an era where domestic cigarette card paper gradually replaced imported cigarette card paper. The company has advanced production technology and equipment, and has strong R&D capabilities. Its main business includes thermal paper, sublimation transfer paper, high-grade coated white card paper, and self-adhesive materials. It has successively developed dozens of new products to fill many domestic gaps. It has successively obtained 272 technical invention patents and won the first prize of the National Science and Technology Progress Award.

After the merger of the company, white cardboard became the main source of revenue for the company. After merging and restructuring Yuehuabao in 2021, the company added businesses such as high-grade coated white cardboard, chemicals, and color printed products. In 2021, the company's revenue was 7.398 billion yuan, up 13.86% year on year, of which high-grade coated white card paper accounted for 53%; in 2023, the company's revenue was 7.403 billion yuan, and high-grade coated white card paper accounted for 49%. Currently, the company has a white card production capacity of 0.58 million tons, specialty paper production capacity of 0.2 million tons, etc. It is expected that in 2024, it will add 0.3 million tons of food cards and 0.06 million tons of specialty paper production capacity, which will enable growth.

Excellent R&D strength, leading technological innovation and industrial upgrading. Since its establishment, the company has focused on production and development in the coating field, maintained stable R&D investment, and continuously committed to R&D and innovation of specialty paper and special materials. At the same time, the company introduced paper coating equipment and technology from internationally renowned companies such as Swiss BMB and German VOITH. These devices have the characteristics of high automation and sophisticated technology. The overall operation is efficient, stable and energy consumption is low. The product quality is in a leading position in the industry, and the core technology has reached the international advanced level.

Profit forecasting and investment advice. We predict that demand for white cardboard will increase in the future, and that the country's “plastic instead of paper” policy will increase demand in the downstream sector of paper products. The company actively lays out product research and development, and plans to increase production capacity in 24. We predict that in 24-26, the company's net profit to mother will be 0.184 billion yuan, 0.302 billion yuan, and 0.386 billion yuan, respectively, +499%, +64%, and +28% over the same period, giving it a “highly recommended” investment rating.

Risk warning: Consumption recovery is not ideal, raw material prices are affected by exchange rate fluctuations, and production capacity is falling short of expectations