Key points of investment
The company released 24H1 results
24H1 achieved revenue of 7.353 billion yuan (YoY +15.52%), net profit of 0.497 billion yuan (YoY +15.15%), and deducted non-net profit of 0.522 billion (YoY +3.96%), combining soft power with hard power to help the company outperform the general trend of the industry.
24Q2 single-quarter revenue of 3.878 billion (YoY +12.28%), net profit attributable to mother 0.278 billion (YoY +11.23%), deducted non-net profit 0.279 billion (-19% YoY).
The difference in non-recurring profit and loss is mainly due to the fair value change profit and loss (24Q2 was profit of 3.09 million, 23Q2 was loss of 0.124 billion), and the net profit margin to mother is more indicative.
The 24H1 dividend paid 0.302 billion yuan, accounting for 60.7% of net profit attributable to mother, continuing to enhance returns.
The 3C business continues to recover, and AI phones are expected to drive the switching trend in 25) Stock market demand recovery: According to IDC, 24Q2 global smartphone shipments were 0.2854 billion units (+6.5% year over year), growing for the fourth consecutive quarter. Domestic smartphone shipments grew by 25.5%/+13.5%/+14.3% year-on-year, respectively, in April-June, which was significantly better than in Q1.
2) The potential increase in AI phones is considerable: IDC expects global shipments of next-generation AI phones to reach 0.17 billion units in 2024, accounting for about 15% of total smartphone shipments. The AI system AppleIntelligence was announced at the Apple conference in June. The forecast for AI mobile phone shipments in 25 is optimistic, which is expected to spawn an upward boom cycle similar to the previous 5G switching wave.
Incremental business: environmental protection H1 +29%, stable improvement in tobacco and alcohol
1) Eco-friendly packaging: 24H1's revenue was 0.547 billion yuan (+29% year over year). The labor package sector improved simultaneously with the recovery of the 3C boom. At the same time, customer expansion in the meal package business increased. Driven by the policy, the demand for iterative eco-friendly packaging increased, and I am optimistic about the potential of lunch bags under the plastic ban trend.
2) Tobacco packs and wine bags: Continue to enter into cooperation with many provincial tobacco companies to deeply cultivate the middle and high-end liquor customer market, benefiting from the optimization of the competitive landscape and the expected increase in its share.
Global production layout and smart factories are being put into operation one after another
1) Overseas Factories: 24H1 Mainland China/Overseas Revenue +9.55%/+32.2%. The company increased the proportion of raw materials imported from overseas and promoted the strengthening of the trend of localization of raw materials supply to overseas production bases.
Vietnam: The first overseas smart factory was put into operation, setting a benchmark, and 6 new smart factory construction was launched.
India: 24H1's revenue was 0.368 billion, profit was 0.08 billion, and the profit margin reached 22%, thanks to the significant scale effect of producing large single products.
Philippines: New opening on July 22. I am optimistic that Yutong's global production layout will bring a stronger competitive share advantage.
2) Domestic factories: A number of smart factories have been put into operation, and several smart factories are under construction.
Financial indicators
24Q2 gross profit margin 24.95% (year-on-year +1.43pct), with a period cost ratio of 15.02% (+5.22pct), of which the sales expense ratio was +0.32pct, management+R&D expenses increased by 1.05pct, and the financial expenses ratio was +3.84pct.
24Q2 net operating cash flow of 0.494 billion (-61.35%) is mainly due to high procurement expenses this year.
Profit forecasting and valuation
Yutong is a diversified paper packaging leader. It digs deep into customer share and extends the service chain. One-stop solution capabilities and customer stickiness are constantly increasing, and it is optimistic about long-term growth. The estimated 2024-2026 revenue is 17 billion (+11.69%), 19 billion (+11.98%), 21 billion (+10.56%), and net profit of 1.637 billion (+13.81%), 1.804 billion (+10.21%), and 1.985 billion (+10.06%), corresponding PE is 12.55X, 11.39X, and 10.34X, respectively, maintaining the “buy” rating.
Risk warning: fluctuating raw material prices, weak 3C demand