Innovator in the kraft paper market, covering everything from papermaking to packaging: Since its establishment in 2000, Sunshine Paper has become one of the important paper companies in Asia and the world, with total assets of over 11 billion yuan, 5,000 employees, and more than 30 subsidiaries. The company focuses on the high-end paper market, with an annual paper production capacity of 2.3 million tons, and has established a leading position in the fields of white-faced kraft paper and coated white-faced kraft paper. In terms of technological innovation, the company has established technology centers and research institutes, and has more than 70 independent intellectual property rights. Through the innovative “grass to wood” raw material strategy, the company has become the main setter of technology and standards within the industry. The sales network is extensive, covering 34 domestic branches and many international markets. The company is at the forefront of the industry in terms of digital transformation and intelligent manufacturing. At the same time, it has further strengthened its leading position in the industry through business expansion and strategic investment, such as entering the high-end corrugated paper market and introducing strategic investment in Hong Kong paper sources. The company excelled in capacity scale, technical strength and market expansion, demonstrating strong competitive advantages and growth potential.
With the synergy of the three sectors, the quality of customers is excellent, and demand is expected to recover: through its comprehensive business layout, the company covers the paper, packaging and supporting industries, forming a complete industrial chain from raw materials to finished products. In the papermaking sector, the company mainly produces a variety of paper products, including white coated cow cardboard, corrugated paper, and special paper. Among them, white coated kraft cardboard, as the company's innovative product, occupies about 55% of the market share in the middle and high-end market, while the market share of white kraft paper exceeds 30%. The market advantages of these products have provided strong support for the company's steady revenue and growth. At the same time, the company has established deep cooperative relationships with leading companies such as Mengniu, Erie, and Budweiser, further consolidating its market position in the food and beverage, medicine, home appliances, and new energy industries. Despite fluctuations in raw material prices and market competition, the company's financial position remains stable and has good ability to withstand pressure. In terms of downstream market demand and raw material supply, the company successfully met the challenges and continued to maintain positive profits. Coupled with the recovery of the Chinese consumer market and increased demand in the packaging industry, it has provided a positive market environment for the company's future business growth.
Product advantages, customer base and industrial chain layout lay the foundation for long-term growth. The target price is HK$3.44, covering the first time and giving a buying rating: We are optimistic about the company's medium- to long-term growth prospects, based on its product diversification and precise market positioning, stable end customer base, and strong industrial chain layout. The company's flexible layout between the paper and packaging sectors enhances its resilience to risk. Combined with valuation analysis of major competitors, it is predicted that the company will maintain steady growth in the next few years. We set a target price of HK$3.44 for the next 12 months based on a seven-fold valuation. Compared with the current price, there is still room for growth of 25.7%. For the first time, we covered the company and gave it a buying rating.