Xianhe(SH:603733) Huachuang Securities·2024-08-16 08:42Investment Rating - The report maintains a "Recommended" rating for the company with a target price of 24.5 CNY per share, compared to the current price of 16.01 CNY [1]. Core Views - The company reported its 2024 mid-year results, achieving revenue of 4.6 billion CNY, a year-on-year increase of 22.2%, and a net profit attributable to shareholders of 550 million CNY, up 204.7% [1]. - The company is experiencing strong production and sales, with significant growth in both domestic and overseas markets, particularly in the special paper segment [1]. - The profitability is recovering with effective cost control, as evidenced by an increase in gross margin to 17.7%, up 8.6 percentage points year-on-year [1]. Financial Performance Summary - For the first half of 2024, the company achieved a revenue of 4.6 billion CNY, with a net profit of 550 million CNY and a net profit excluding non-recurring items of 500 million CNY, reflecting year-on-year growth rates of 22.2%, 204.7%, and 237.6% respectively [1]. - In Q2 2024, the company reported revenue of 2.39 billion CNY, net profit of 280 million CNY, and net profit excluding non-recurring items of 260 million CNY, with year-on-year growth rates of 24.1%, 381.3%, and 698.7% respectively [1]. - The company’s production capacity is steadily increasing, with a total production of 554,700 tons of paper in the first half of 2024, a 22% increase year-on-year [1]. Future Outlook - The company is expected to continue benefiting from its integrated strategy in the pulp and paper industry, with projected profits of 1.085 billion CNY, 1.407 billion CNY, and 1.698 billion CNY for 2024, 2025, and 2026 respectively, corresponding to a price-to-earnings ratio of 10, 8, and 7 times [1][2]. - The company is also expanding its overseas market presence, successfully entering the supply chain of a leading global tobacco company, with export revenue of 370 million CNY in the first half of 2024 [1].