Wuzhou Special Paper(SH:605007) Guotai Junan Securities·2024-08-18 08:40Investment Rating - The report maintains a rating of "Buy" for the company [4][10]. Core Views - The company's performance meets expectations, with cost reductions expected to be released in the second half of the year, and sufficient capacity reserves indicating a clear growth logic [2]. - The company is projected to achieve earnings per share (EPS) of 1.37, 1.75, and 2.09 CNY for 2024, 2025, and 2026 respectively, with a target price raised to 19.20 CNY based on a 14x price-to-earnings (PE) ratio for 2024 [2][4]. Financial Summary - Revenue: - 2022A: 5,962 million CNY - 2023A: 6,519 million CNY - 2024E: 7,888 million CNY (21.0% increase) - 2025E: 9,545 million CNY (21.0% increase) - 2026E: 11,263 million CNY (18.0% increase) [2][9] - Net Profit (Attributable to Parent): - 2022A: 205 million CNY - 2023A: 273 million CNY (33.0% increase) - 2024E: 554 million CNY (102.9% increase) - 2025E: 707 million CNY (27.6% increase) - 2026E: 844 million CNY (19.4% increase) [2][9] - Earnings Per Share (EPS): - 2022A: 0.51 CNY - 2023A: 0.68 CNY - 2024E: 1.37 CNY - 2025E: 1.75 CNY - 2026E: 2.09 CNY [2][9] - Return on Equity (ROE): - 2022A: 9.3% - 2023A: 11.3% - 2024E: 19.6% - 2025E: 21.2% - 2026E: 21.4% [2][9] - Price-to-Earnings Ratio (PE): - 2022A: 22.54 - 2023A: 16.95 - 2024E: 8.35 - 2025E: 6.54 - 2026E: 5.48 [2][9] Capacity and Production Insights - The company achieved a sales volume of 565,000 tons of mechanical paper in the first half of 2024, a year-on-year increase of 32.8%, with significant contributions from food packaging and cultural paper [2]. - The company has a total production capacity exceeding 2.39 million tons across its three major paper-making bases, which helps stabilize its operations against industry cyclicality [2][4]. Market Position and Expansion - The company is expanding its product matrix through acquisitions and self-built bases, enhancing its product diversification [2]. - The first phase of the northern base construction is nearly complete, marking the entry of industrial packaging paper products into the company's portfolio [2]. Target Price and Valuation - The target price has been adjusted to 19.20 CNY, reflecting the company's growth potential and valuation premium due to its multi-category expansion strategy [2][4].