Xianhe(603733) Zhongyuan Securities·2024-08-16 08:07Investment Rating - The report assigns a "Buy" investment rating to the company, indicating an expected increase of over 15% relative to the CSI 300 index within the next six months [1][5][14]. Core Views - The company has shown significant growth in profitability, with a 204.73% year-on-year increase in net profit attributable to shareholders, driven by production capacity expansion and improved operational efficiency [1][3]. - The company is advancing two major investment projects, each valued at over 10 billion RMB, aimed at enhancing its integrated production capabilities in the paper industry [1][2]. - The company has successfully established stable relationships with international clients, contributing to a steady growth in export revenues [1][4]. Financial Performance - In the first half of 2024, the company achieved a revenue of 46.04 billion RMB, representing a year-on-year growth of 22.23% [1][6]. - The net profit for the same period reached 5.50 billion RMB, with a significant increase of 204.73% compared to the previous year [1][6]. - The gross profit margin improved to 17.69%, up by 8.58 percentage points year-on-year, reflecting better cost management and product pricing strategies [3][4]. Production and Sales - The company reported a production volume of 55.47 million tons of paper in the first half of 2024, a 22% increase year-on-year, and a sales volume of 51.36 million tons of specialty paper, up 31.77% [1][2]. - The production of food-grade paper reached 4.76 million tons, with sales hitting 5.13 million tons, showing a substantial improvement in profitability since the initial launch of the project [2][3]. Market Position and Strategy - The company is expanding its market presence in Europe, Southeast Asia, and the Middle East, with export sales reaching 3.66 billion RMB in the first half of 2024 [1][4]. - The ongoing development of new products and technologies, along with optimized raw material procurement, is expected to further enhance the company's competitive edge in the specialty paper market [3][4]. Future Projections - The company is projected to achieve net profits of 10.42 billion RMB, 13.42 billion RMB, and 17.48 billion RMB for the years 2024, 2025, and 2026, respectively, with corresponding earnings per share (EPS) of 1.48 RMB, 1.90 RMB, and 2.48 RMB [5][6].