华升证券:荐“买入”阳光纸业 料股价有近六成增长空间

Huasheng Securities: Recommended to “buy” Sunshine Paper, stock prices have room to grow by nearly 60%

新浪港股 ·  12/01/2023 09:50

According to a research report released by Huasheng Securities, Sunshine Paper's owner business has outstanding advantages, and the main business restoration+specialty paper business market opening is highly certain. At the same time, in the future, with the support of new shareholders C&D Pulp, they are expected to use synergies to reduce costs and increase efficiency, covering the first time, giving it a “buy” rating. Referring to comparable companies' 2024 expectations of the PE and Hong Kong A-share market differences, a conservative estimate of 7 times PE. Based on the 2024 EPS 0.54 yuan/share calculation, the corresponding stock price is HK$4.12 per share, which has room for growth of about 59% compared to the current stock price.

The bank predicts net profit of 4.32, 5.53, and 666 million yuan for 2023-2025 respectively, corresponding to EPS 0.37, 0.48, and 0.57 yuan/share. Hong Kong stocks Chenming Paper, Nine Dragons Paper, Liwen Paper, and A-share Mountain Eagle International, Bohui Paper, and Yutong Technology were selected as comparable companies. Comparable companies' average PE for 2023-2025 was 20.75, 8.19, and 6.90. However, Sunshine Paper has excellent fundamentals and sufficient potential for development, and is significantly underestimated at this stage.

The report points out that Sunshine Paper is guided by a differentiated strategy, its core business is stable, and its financial performance is outstanding. The company focuses on the field of wrapping paper and is Asia's leading manufacturer and supplier of paper products and paper product packaging such as white-faced kraft paper, coated white cardboard, paper tube base paper, corrugated paper, etc. Currently, it has a total production capacity of 2.3 million tons of various paper products. In the first half of 2023, Sunshine Paper achieved operating income of 4.208 billion yuan, a year-on-year decrease of 4.25%; net profit of 193 million yuan, a sharp increase of 18.4% over the previous year, demonstrating full operational resilience.

The company continues to promote digital transformation. As a traditional paper company, Sunshine Paper took the lead in establishing a digital platform within the industry, using artificial intelligence, IoT technology, etc., to integrate systems such as supply chain management, smart logistics, big data applications, blockchain+renewable resources, etc., to promote management and industrial upgrading. Relying on digital transformation and upgrading, the company has doubled production capacity and halved personnel. In the next 3 to 5 years, based on an intelligent manufacturing platform, the company will promote the construction of central control rooms, realize remote centralized control and production scheduling, dig deeper into data value, and achieve digital business empowerment.

The biomechanical pulp project is progressing steadily, and the application of special cardboard blocks has opened up. The main raw material for biomechanical pulp is agricultural straw, which is rich in resources in China. It helps solve the problem of shortage of raw materials in China's paper industry, and also effectively solves the problem that agricultural straw is difficult to dispose of, and has obvious economic, social and ecological benefits. Biomechanical pulp is widely used downstream and can replace wood pulp to produce multi-purpose paper types such as kraft paper, photovoltaic liner, food-grade packaging paper, medical paper, etc., as well as food grade paper cups and lunch boxes for pulp molding. The company's biomechanical pulp project has progressed steadily since construction began in 2019, and the market for downstream applications is also opening up in cooperation. The breakthrough “from 0 to 1” of photovoltaic liner paper led to long-term cooperation with leaders in the photovoltaic glass industry such as Follett and Xinyi Glass in the first half of the year, and PV liner shipments grew steadily. The company plans that in 2023, the company's photovoltaic liner production will reach 20,000 tons, and by 2027, the company's biomechanical pulp production will reach 500,000 tons.

Furthermore, on July 14, Sunshine Paper announced that Hong Kong Paper Source Co., Ltd., a subsidiary of Xiamen Jianfa Pulp & Paper Group, a subsidiary of C&D Co., Ltd. (600153.SH), plans to invest in the subscription of 162 million shares of Sunshine Paper's common stock. After the transaction was completed, Hong Kong Paper Source became the second largest shareholder of Sunshine Paper. C&D Pulp Group is a wholly-owned subsidiary of C&D Co., Ltd. Since its establishment in 1992, it has developed into the world's leading full-industry chain operator in the field of forest pulp, paper, printing and packaging. The introduction of state-owned enterprises with strong industrial synergy and strong strength as strategic shareholders will help the company get more support in terms of business resources, capital operation and financing, and increase the company's development potential.

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