The company issued an annual report for 24 and a half years. The company achieved operating income of 3.431 billion yuan in 2024H1, up 20.76% year on year: total profit of 27 billion yuan, year-on-year net profit of 23.2 billion yuan, year-on-year net profit of 22.4 billion yuan: realized year-on-year conversion to profit: single 2 realized operating income of 1.705 billion yuan, up 7.71% year on year; net profit due to mother of 0.099 billion yuan, up 457.68% year on year to achieve year-on-year deduction of non-return to mother Net profit of 9.3 billion yuan increased by 62641% year-on-year to expand production capacity and promote base construction. The company completed machine paper production in 2024H1 of 0.5808 million tons, up 20.57% year on year; sales volume was 0.5661 million tons, up 32.82% year on year. The company has built 15 production lines with a total design capacity of 2.096 million tons: the three major bases have collaboratively developed, and the total production capacity of the company has exceeded 2.39 million tons: the Quzhou base continues to expand production in an orderly manner, the Jiangxi base has basically completed 1.1 million tons of production capacity, and the first phase of 2024H1 Hubei construction has basically been completed: the company has increased technical improvements to Wuzhou Special Paper (Longyou) to increase the production of industrial paper liners.

Diversify products, integrate pulp and paper, and build an all-factor industrial chain. The 0.3 million ton machine pulp production line invested by the company was put into use in 2024Q1. Through collaboration in chemical machine pulp production capacity climbing, formulation optimization, and wood chip source, etc., it basically achieves the effect of perfect pulp and paper balance between food white cards and cultural paper. It has a certain cost saving effect, providing a strong raw material guarantee for future product structure optimization and adjustment: in various main business areas, food packaging and beverage series design capacity is 0.78 million tons. The design capacity for daily consumer materials is 0.301 million tons, publishing and printing material design capacity 0.3 million tons, a design capacity of 35 square tons of industrial supporting materials, and an estimated production capacity of nearly one million tons for industrial packaging materials.

Fluctuations in the industry environment benefit leading manufacturers. The company's raw material costs have declined year-on-year, the supply of most specialty paper products is stable and demand is improving, and sales prices are weak: 24Q3 is expected to have less upward pressure on pulp prices, which is beneficial to paper mill cost control: fluctuations in the wood pulp cycle, the intensity of economic recovery falls short of expectations, and the centralized investment of new production capacity in Dagang, accelerates the clean-up of small and medium-sized production capacity within the industry, favors leading companies to catalyze industry concentration and obtain more profit space.

Maintaining “Highly recommended investment ratings. As one of the largest domestic specialty paper R&D and production enterprises, the company has diversified product and scale advantages: it has accumulated rich customer advantages, resolutely implemented the integrated pulp and paper strategy, continued to expand the scale of production capacity, achieved significant revenue growth, turned losses into profits, and has good growth potential. We expect net profit attributable to mother in 2024-2026 to be 0.517 billion yuan, 0.679 billion yuan, and 812 million yuan, respectively, +90%, +31%, and +20%, respectively. The corresponding PE is 8.8 ×, 6.7 ×, and 5.6 ×, respectively.

Risk warning: raw material price fluctuations, policy changes, increased market competition