Sun Paper (002078) Q3 Review: Corporate Paper’s Prosperity Continues to Improve Profits

Sun Paper (002078) Q3 Review: Corporate Paper’s Prosperity Continues to Improve Profits

The main points of the report describe Sun Paper’s third quarterly report, which achieved revenue of 164 in the first three quarters of 2019.

10,000 yuan, an increase of 1.

81%, achieving net profit attributable to mother 14.

85 ppm, a reduction of 17 per year.

57%; of which 56 in the third quarter.

2.5 billion, down by 0 every year.

2%, to achieve net profit attributable to mother 5.

9.8 billion, an increase of 4.


  Event commentary The price of paper products has diverged, and the company’s revenue in the third quarter alone has remained stable.

In the third and third quarters, the company’s revenue decreased slightly by 0 every year.

2% to 56.

2.5 billion US dollars, new capacity expansion and construction to hedge the impact of falling paper prices, of which, in terms of price: single Q3 box board / corrugated / copper board / double offset paper prices fell by 1419/1300/971/894 yuan (23% / 25% / 14%/ 12%), a month-on-month change of -350 / -365 / 87/75 yuan (-6.

86% /-8.

53% / 1.

47% / 1.

19%); coniferous pulp / broad leaf pulp / chemical pulp decreased gradually by US $ 292 / US $ 293/968 yuan per ton (33.

18% / 37.

5% / 20.

41%), a decrease of 88 US dollars / 233 US dollars / 465 yuan (13.

02% / 32.

29% / 10.

98%); dissolving pulp / waste paper decreased by 1487/1031 yuan / ton per year (19.

53% / 34%), a month-on-month decrease of 712/苏州夜网论坛168 yuan / ton (10.

41% / 7.


In terms of production capacity, it is expected that in the same period last year, the increase in production capacity in the third quarter of 2019 will include 80-inch kraft linerboard (commissioned in the second half of 2018) and waste paper pulp (gradual commissioning in June 2019).

  The prosperity of cultural paper is rising, and the company’s single Q3 profit margin continues to improve.

The net profit attributable to the company in the third quarter alone was 5.

9.8 billion, an annual increase of 4.

37%, of which: in terms of gross profit margin: the gross profit margin in the third quarter was 23.

84%, an increase of 0 a year.

70pct, an increase of 2 from the previous month.

07pct; Among them, the company ‘s gross profit margin is still rising under the background of continued pressure on papermaking. We judge that it 杭州桑拿网 may be caused by the increase in demand for cultural paper brought by the mass printing of party and government books. 2019 is the 70th anniversary of the founding of the country. Party and government booksThe printed volume has increased significantly. This type of product has the following characteristics: 1. High requirements on paper quality and orders are concentrated in leading enterprises; 2. Short delivery cycle, usually about two weeks, may have a thrust on the current industry boom.

Affected by this, the profitability of cultural paper continues to rise. According to Zhuo Chuang data, as of the end of September 2019, the gross profit of double-coated paper exceeded 1,000 yuan, which could vary by 236% and 16% from the previous quarter.

For packaging paper, due to the increased output of the industry and the weakening of terminal demand, we expect that the overall profit may be slightly under pressure; for dissolving pulp, affected by anti-dumping duties and downstream viscose staple fiber and cotton prices, the profit of dissolving pulp productsContinuing the downward trend; in terms of expense ratios: the company’s sales / management / R & D / financial expense ratios in the third and third quarters were 4, respectively.

00% / 2.

43% / 1.89% / 2.

48%, short-term change of 0.

21pct / -0.

34 points / 0.

63pct / -1.

17 points.

Among them, the increase in the R & D expense ratio was mainly due to the company’s increased expenditure on waste paper substitutes and other fields; the declining financial expense ratio was mainly due to the company’s remaining repayment (the company’s asset-liability ratio was 59 from 2018Q3.

51% canceled 54 in 2019Q3.

74%), interest rate expenditure decreased, and the company replaced the low interest rate long-term debt provided by the China Development Bank, which also effectively improved its liability structure; in terms of cash flow: the company’s net cash flow from operating activities in the third and third quarters decreased, mainly due toUnder the background of falling prices, the company increased its purchase of wood pulp. We estimate that the company’s wood pulp’s proportion in inventory may gradually increase in the third quarter.

  Looking ahead, the fourth quarter of cultural paper is still in the peak demand season. At present, there is no new capacity in the industry. Under the background of low inventory, we are optimistic about the opportunity to improve the profitability of cultural paper in stages. For packaging paper, consider Shanying and Nine Dragons.The release of production capacity (initialized at around 50) is expected to still be in the consolidation phase. With the exit of small and medium-sized paper companies and the recovery of terminal demand, the industry’s prosperity may gradually enter the upward channel.

For the sun, it is still in the capacity development period. In 2021, it will be a year of capacity production. The main types of input are raw materials (wood pulp / waste pulp) and low-concentration paper products (boxboard corrugated paper / double adhesive paper).With the gradual landing of the Guangxi base, it is expected that the advantages of forest pulp and paper will be combined to accelerate market integration.

  Bring resource endowments to accelerate industry consolidation and continue to focus on Sun Paper’s investment opportunities.

Self-sufficient raw materials in the paper industry can still reach cost-effectiveness, and only a few paper companies have too much raw material self-sufficiency, which is expected to promote the profit differentiation of paper companies.

Leading paper companies can achieve industry consolidation while maintaining a stable profitability.

Sun Paper merges the Laos project to supplement the core element of raw material resources. It is expected that the Laos base will continue to release wood pulp and waste pulp capacity in the next two years. From the perspective of the industrial cycle, its resource exclusivity will be at least 3 in the future.
It is difficult to be broken within 5 years, and you can fully enjoy the performance flexibility of the self-sufficiency of raw materials.

At present, the company’s PE and PB are at historically high levels, and with the improvement of profit or the expected recovery opportunities, it is recommended to actively deploy.

  Risk Warning: 1.

A large number of new production capacity was put in place, and industry demand continued to grow; 2.

The foreign waste policy was significantly relaxed.