Qunyi**(Hong Kong)**Zhao Xudong recently conducted research on Sun Paper and released a research report "4Q Profit Grows Significantly, Optimistic About the Cost Advantage of the Company's Forest, Pulp and Paper Integration", this report gives an overweight rating to Sun Paper, believing that its target price is 15$80, the current share price is 1373 yuan, the expected range of ** is 1508%。
Sun Paper (002078).
Conclusions and Recommendations:
Event: The company released its 2023 performance report, achieving revenue of 397 in 20230.3 billion yuan, yoy-016%, net profit attributable to the parent company 307.2 billion yuan, yoy +938%, net profit after deducting non-profit 301.6 billion yuan, yoy + 883% with an EPS of 110 yuan, yoy + 521%, the net profit attributable to the parent company and after deducting non-profits reached a record high, in line with expectations. Among them, 2023Q4 achieved revenue of 1050.1 billion yuan, yoy+370%, net profit attributable to the parent company 93.5 billion yuan, yoy + 7293%, net profit after deducting non-profit 93.1 billion yuan, yoy + 7361%, the company's Q4 profit increased significantly, mainly because of the recovery of downstream demand and the optimization of the cost side.
Paper products** continued to rebound, and the company's 4Q revenue increased month-on-month. 4Q achieved revenue of 105 in a single quarter0.1 billion yuan, an increase of 339%, mainly due to the gradual recovery of downstream demand since 2023Q3, which has promoted the rebound of paper products, of which the average price of double-offset paper, containerboard, and coated paper at the end of 2023 is higher than the low point in July22%。In January 2024, Chenming Paper, Sun Paper and other paper companies have issued cultural paper price increase letters, raising prices by 100 yuan tons in February and 200 yuan tons in March.
Cost-side optimization drove quarter-on-quarter improvement in the company's profitability. In 2023, the annual pulp ** will show a U-shaped trend, and the average price of hardwood pulp star and softwood pulp silver star will decrease year-on-year in 2023. 66%。Due to the significant decline in the pressure on the cost side, superimposed on the inventory cycle, pulp shipping schedule and other factors, the company's operating profit margin is increasing quarter by quarter, and the operating profit margin in 2023Q1 Q2 Q3 Q4 is respectively. 45%。Thanks to the company's profitability repair, 4Q Company's net profit attributable to the parent after deducting non-profits was 93.1 billion yuan, a record high in the same period.
In 2024, the pulp price may enter the first-class consolidation stage, and the company's cost pressure will be further reduced. In 2023, the concentrated production capacity of global pulp mills will drive the rapid increase in pulp prices**, and in 2024, Suzano will put into production 2.55 million tons, accounting for about 7% of global production capacity. In terms of overseas demand, the Red Sea event may increase the demand for replenishment in Europe in the short term, but the European PMI in February 2024 is 4610. It has been under the boom and wither line for 20 consecutive months, and it is expected that the growth of European medium and long-term demand will be limited; On the domestic demand side, according to the China Paper Association, the consumption of papermaking pulp in 2023 will be about 11.6 billion tons, yoy+22%, so we expect pulp consumption to remain in the single digits in 2024, but there is a high probability that demand will grow at a slower pace than supply. On the whole, we believe that in 2024, the pulp price may enter the first-class finishing stage, and the company's cost pressure is expected to be further reduced, and the performance growth is expected.
Profit** and investment advice: The company is a leading papermaker in China, and its performance is expected to continue to grow under the easing of cost pressure. Given the pace of demand recovery, we have slightly downgraded earnings** and expect the company to achieve a net profit of 30 per year7.2 billion yuan, 347.5 billion yuan, 38$1.6 billion (previously expected.) 0.1 billion yuan), yoy were +939%、+13.09%、+9.81% with an EPS of 110 yuan, 124 yuan, 137 yuan, the corresponding PE of the current A stock price is 1249 times, 1104 times, 1006 times, we are optimistic about the company's performance growth, and give "buy" investment advice.
Risk warning: the risk of intensified market competition, the risk of fluctuation of raw materials, and the demand is less than expected.
*According to the calculation of the research report data released in the past three years, the research team of Zhong Minli of the Yangtze River has conducted in-depth research on the stock, and the average accuracy of the past three years is as high as 9519%, and its **2023 attributable net profit is 309.7 billion, and the **PE converted according to the current price is 1239。
The latest profit** breakdown is as follows:
A total of 12 institutions have rated the stock in the last 90 days, **12 have rated it; The average institutional price target over the last 90 days is 1483。
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