Key points of investment

The company released 24Q3 results

24Q1-Q3 achieved revenue of 12.26 billion (YoY +13.44%, same below), net profit of 1.114 billion yuan (+13.05%) to mother, and 1.13 billion (+9%) net profit after deducting non-attributable net income

24Q3 single quarter: revenue 4.905 billion (+10.45%), net profit due to mother 0.617 billion (+11.41%), net profit not attributable to mother 0.607 billion (+13.73%)

Both sides of Q3 revenue and profit achieved double-digit growth in a single quarter, and recorded record highs, and steady growth.

A new round of repurchases will be implemented in 2024, and it is planned to repurchase 0.1-0.2 billion yuan. As of September 30, 2024, about 29.107 million yuan has been repurchased, and the repurchase continues to be implemented.

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, 24Q3 global smartphone shipments were 0.316 billion units (+4% year over year), and it has been growing for 4 consecutive quarters. The year-on-year growth rate of domestic smartphone shipments in June-August was 14.3%/+28.3%/+17.7%, respectively, which improved significantly.

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.

Global production layout and smart factories are being put into operation one after another

Overseas factories: 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 factory: The first overseas smart factory was put into operation, setting a benchmark, and the construction of 6 new smart factories was launched. India factory: 24H1 has revenue of 0.368 billion, profit of 0.08 billion yuan, and a profit margin of 22%, thanks to the significant scale effect of producing large single products. Philippines factory: Newly opened on July 22. Mexico plant: New opening on September 26th. I am optimistic that Yutong's global production layout will bring a stronger competitive share advantage.

Domestic factories: A number of smart factories have been put into operation, and several smart factories are under construction.

Incremental business: continuous growth in the environment, stable improvement in tobacco and alcohol

1) Eco-friendly packaging is expected to maintain good growth: the workpack sector is improving simultaneously along with the recovery of the 3C boom, while customers in the meal package business expand. Demand for iterative eco-friendly packaging is increasing under policy impetus, and we are 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.

Financial indicators

The gross margin for the 24Q3 quarter fell 0.5 pct year on year, and the sales expense ratio increased by 0.32 pct year on year, but the management+R&D expenses ratio fell 1.05 pct year on year, the financial expenses ratio fell 0.55 pct year on year, and the comprehensive net profit margin was +0.11 pct year on year. The 24Q3 operating cash flow in a single quarter was +22% year-on-year, and the performance was impressive.

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 17.1 billion (+12.08%), 19.1 billion (+12.05%), 21.1 billion (+10.61%), net profit to mother 1.629 billion (+13.26%), 1.812 billion (+11.25%), and 1.995 billion (+10.12%), corresponding PE is 14.1X, 12.67X, and 11.51X, respectively, maintaining the “buy” rating .

Risk warning: fluctuating raw material prices, weak 3C demand