Xianhe(603733) EBSCN·2024-10-30 11:10Investment Rating - The report maintains a "Buy" rating for Xianhe Co., Ltd. (603733.SH) with a current price of 19.17 CNY [1]. Core Views - The company achieved a revenue of 7.26 billion CNY in the first three quarters of 2024, representing a year-on-year increase of 16.9%, and a net profit attributable to shareholders of 820 million CNY, up 114.0% year-on-year [1]. - The growth in revenue is attributed to capacity expansion and accelerated overseas market development, with products now widely sold in Japan, South Korea, North and South America, Europe, Southeast Asia, the Middle East, and Central Asia [1]. - The report projects revenue for 2024-2026 to be 10.01 billion CNY, 11.66 billion CNY, and 14.25 billion CNY respectively, with corresponding net profits of 1.09 billion CNY, 1.38 billion CNY, and 1.59 billion CNY [2][3]. Summary by Sections Revenue and Profitability - In Q3 2024, the company reported revenue of 2.66 billion CNY, a year-on-year increase of 8.7%, and a net profit of 270 million CNY, up 32.5% year-on-year [1]. - The gross margin for the first three quarters of 2024 was 16.6%, an increase of 7.4 percentage points year-on-year, while Q3 2024 gross margin was 14.6%, up 5.3 percentage points year-on-year but down 2.8 percentage points quarter-on-quarter [1]. Financial Projections - The report forecasts earnings per share (EPS) for 2024, 2025, and 2026 to be 1.54 CNY, 1.96 CNY, and 2.25 CNY respectively, with price-to-earnings (P/E) ratios of 12, 10, and 9 times [2][3]. - The company’s capital expenditure is expected to exceed the industry average, indicating a strong investment in growth [2]. Market Position and Strategy - The report highlights the increasing integration of pulp and paper production, which is expected to enhance profitability as the company expands its production capacity [2]. - The company is positioned to capture a larger market share in the specialty paper industry, which is trending towards consolidation among leading players [2].