Source: Securities Times
Jingxing Paper disclosed the 2018 performance report on the evening of February 27, the company achieved operating income of 5.938 billion, an increase of 11%; net profit of 342 million, down 46% year-on-year; basic earnings per share of 0.31.
In contrast to Jingxing Paper, most companies have a good performance last year. In addition, with the regular price increase after the holiday, the price increase letter was intensively released, and the overall market rebounded. Since February, the papermaking sector has rebounded synchronously. The Shenwan Paper Index has risen 16.88% since February, while the Shanghai Composite Index rose 14.29%. The agency believes that the price increase of domestic finished paper is expected to continue for a certain period of time due to the increase in the price of raw materials and the impact of the Spring Festival.
Underwriting loss performance
The decline in net profit of Jingxing Paper last year was mainly due to the loss of investment in Sharpe. The performance report shows that Jingxing Paper holds a 9.06% stake in Shapu Aisi, while the latter expects a loss of 110 million to 130 million in 2018. Jingxing Paper will use the equity method to account for investment income. Net profit has had a certain impact.
Jingxing Paper said that the company's operating conditions are stable and its product sales are good. The sales volume and price of major products have increased slightly compared with the same period of the previous year. The annual sales revenue reached 5.938 billion, an increase of 10.79% over the same period of the previous year.
The environmental protection policy, the increase in tariffs and R&D on the US led to the pressure on Jingxing Paper last year. Last year, affected by the national environmental protection policy, the amount of waste paper imports continued to tighten. The overall waste paper imports fell sharply compared with the same period of the previous year. Domestic waste paper was purchased in the industry to replace imports. The increase in national waste demand made the average purchase price higher than that. In the same period of the same year, in order to ensure the quality of the products, it is necessary to add part of the wood pulp in the production, which increases the cost of raw materials.
In addition, in order to improve competitiveness, Jingxing Paper increased its R&D investment last year. The annual R&D expenditure was about 202 million, an increase of about 60 million over the same period of the previous year, an increase of 42.20%.
Wind data shows that there are currently five companies in the Shenwan paper industry that disclose performance reports. Among them, Zhongshunjie Soft Sun Paper's net profit has maintained growth last year, with an increase of 15.87% and 10.37%, respectively, while the other three have a net profit decline. According to the performance forecast, 16 companies in the Shenwan paper industry have disclosed performance forecasts, and 9 of them have increased their net profit, accounting for 56%.
From the perspective of goodwill, Guojin Securities' statistics papermaking sector had a total goodwill of 4.791 billion at the end of the third quarter of 2018, accounting for 3.67% of the overall net assets of the sector. There are fewer overall mergers and acquisitions in the papermaking sector, and the risk of goodwill impairment is small.
Market improvement valuation repair
As the market sentiment improved, the papermaking sector rebounded more recently. The Shenwan Paper Index has risen 16.88% since February, while the Shanghai Composite Index rose 14.29%. The internal pulp and paper system of the plate rose faster than the waste paper system. The pulp and paper faucet Sun Paper rose 19.87% in the same period in February, Chenming Paper rose 18.76%, and Jingxing Paper rose 18.54%. From the perspective of the whole year, the pattern of the paper industry is still clear, and we should actively pay attention to the possibility of valuation restoration.
Shen Wanhong believes that the recent rise in the papermaking sector is mainly from the three major drivers. The first is the routine price increase after the holiday, and the price increase letter is intensively released. After the Spring Festival, dealers and downstream printing factories replenish stocks, and in March each year, the publishing house invites tenders for autumn textbooks. Cultural papers ushered in the spring season, and routinely raise prices after the festival. Secondly, the profitability of the paper industry bottomed out, and the economy bottomed out to bring earnings to stabilize expectations. In January this year, due to the bottom of the finished paper price + high price pulp inventory, the profit of tons of paper reached the bottom. With the price increase of finished paper in February, the high-priced pulp was digested and the profit of the paper mill was gradually restored. Finally, as liquidity improves, the cyclical product rises. After 2018, the stock price fell sharply, and the papermaking sector valuation is close to the bottom of history. As the overall market sentiment warms up, the valuation is gradually being repaired.
Zhongtai Securities pointed out that the packaging paper price and ton profit basically stabilized, and the national waste price rose by 7.9% last week, but the external waste price fell sharply, and the internal and external waste price difference rose again, which is good for the leader to consolidate the cost advantage. In terms of cultural paper, it is recommended to pay attention to the possibility of price increase and actual implementation of the cultural paper in the market.
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