SDBH(SH:600966) Minsheng Securities·2024-09-02 06:44Investment Rating - The report maintains a "Recommended" rating for the company, indicating a positive outlook based on expected performance improvements and market conditions [5]. Core Views - The company reported a revenue of 9.262 billion yuan for H1 2024, reflecting a year-on-year increase of 6.99%, with net profit attributable to shareholders rising significantly by 137.84% to 131 million yuan [2]. - Despite the revenue growth, the company faces ongoing supply-demand pressures, particularly in Q2 2024, where net profit dropped by 79.76% year-on-year due to rising raw material costs not being fully passed on to product prices [2][3]. - The company is expected to benefit from the new "plastic limit order" policy, with anticipated recovery in downstream demand and cost-reduction measures leading to improved profitability in the coming years [3]. Financial Performance Summary - For H1 2024, the company produced and sold 2.1639 million tons of mechanical paper, achieving a revenue of 9.262 billion yuan, with a stable growth driven by volume increase despite a decline in paper prices [2]. - The gross profit margin for Q2 2024 was reported at 9.3%, down from previous levels, primarily due to the rising cost of pulp not being effectively transferred to selling prices [2]. - The company forecasts net profits of 480 million yuan, 960 million yuan, and 1.203 billion yuan for 2024, 2025, and 2026 respectively, with corresponding PE ratios of 11X, 6X, and 5X [3][4]. Production and Capacity Expansion - The company is focusing on enhancing its production capabilities, particularly in high-end specialty paper, with an expected increase of 800,000 tons in production capacity post-2024 [3]. - The company is also upgrading its production lines to improve efficiency and meet new product standards, which is expected to strengthen its competitive position in the market [3]. Market Conditions - The report highlights that the paper industry is experiencing a phase of consolidation, with smaller capacities being phased out, which is likely to benefit leading companies like the one under review [3]. - The pricing environment remains challenging due to imbalances in supply and demand across different paper types, impacting overall profitability [2].