The company released its 2024 quarterly report
24Q1 achieved revenue of 10.18 billion yuan, +3.9% year on year; net profit of 960 million yuan, +69% year on year, +0.7% month on month; net profit without return to mother of 950 million, +72% year on month, +1.2% month on month, impressive performance!
Among them: 1) Cultural paper has benefited from product price increases, and the company's wood pulp self-sufficiency rate continues to increase, and we expect steady profits; 2) Nanning's high-grade wrapping paper and supporting natural chemical paste projects have been successfully put into operation and production, and production capacity is expected to continue to rise; 3) the price of outer plate pulp has continued to rise since the beginning of the year, and we expect dissolved pulp to maintain a high level of profit.
The construction of the Nanning base is progressing steadily, and the layout of Guangxi is getting better
By the end of 23, the company's total pulp and paper production capacity had exceeded 12 million tons, and the “three major bases” had high-quality collaborative development. Looking at future additional production capacity:
In October '23, the company launched the park's household paper and post-processing production line project with an annual output of 300,000 tons. The first phase of the project is expected to enter the trial production stage one after another in 24Q3;
In addition, the company plans that the Nanning (Phase II) project will build a 400,000 ton specialty paper production line, a 350,000 ton bleached chemical wood pulp production line, a 150,000 ton mechanical wood pulp production line and related supporting facilities. The total investment of the project is expected to be no more than RMB 7 billion; we expect plenty of room for long-term growth.
With the steady implementation and advancement of the Beihai and Nanning double park projects at the company's Guangxi base, the Guangxi base's production facility layout is more reasonable, and coordination has been achieved in product structure optimization, logistics system improvement, and sales channel construction, so that the “forest pulp and paper integration” project at the Guangxi base can develop better in the direction of depth.
The raw forest base in Laos built a moat, and the planting area continued to grow. The company entered Laos in 2008. Currently, the Lao base has formed an annual production capacity of 1.5 million tons of pulp and paper. The company made every effort to promote the construction of fast-growing forests. In 23, the planting area of pulp forests in Laos reached 60,000 hectares, and the self-sufficiency rate of dissolved pulp chips in Laos was about 30%; in the next few years, the base will steadily advance with an additional planting scale of 1-12,000 hectares per year, and planting efforts will gradually increase in the foreseeable future; currently, the planting area of self-managed forests and people's cooperative forests at the Lao base is about 50% each. Later, with the planting effect of local residents, the enthusiasm of the people will gradually increase.
Maintain profit forecasts and maintain “buy” ratings
The integrated layout of the company's pulp and paper has been perfected, the moat of resource and cost control has been deepened, and there is plenty of room for growth. We expect the company's net profit to be 37.1/42.4/4.82 billion yuan respectively in 24-26, corresponding to PE of 12X/10X/9X, maintaining a “buy” rating.
Risk warning: Downstream demand recovery falls short of expectations, new production capacity falls short of expectations, forest land planting progress in Laos falls short of expectations, etc.