YUTO TECH.(002831) Changjiang Securities·2024-12-30 01:19Investment Rating - The report maintains a Buy rating for Yuto Technology (002831.SZ) [3] Core Views - 3C demand elasticity: The report highlights that the inclusion of consumer electronics in consumption subsidy policies across multiple regions is expected to boost 3C (computer, communication, and consumer electronics) demand. For example, the central government has allocated approximately 150 billion yuan in ultra-long-term special treasury bonds to support policies such as appliance trade-ins, with specific subsidies for TVs and laptops. Some regions, including Guangdong and Sichuan, have extended subsidies to cover smartphones and tablets [3][35] - Stable growth in revenue and profitability: Approximately 70% of Yuto's revenue comes from consumer electronics, with major domestic and international clients showing growth potential. New clients like Dyson and NVIDIA are expected to contribute to higher growth rates in Yuto's 3C paper packaging business compared to the broader market. The remaining 30% of revenue comes from sectors like tobacco, alcohol, cosmetics, and eco-friendly packaging (paper replacing plastic), which are expected to grow steadily, especially eco-friendly packaging. Yuto's net profit margin has been recovering since 2021, driven by reduced capital expenditures, lower new capacity drag, cost efficiencies from smart factories, and higher-margin new businesses. The proportion of overseas production, which has higher margins, is also increasing [4][36] - High dividend yield: Yuto has committed to a dividend payout ratio of no less than 60% from 2023 to 2025. The company plans to repurchase 100-200 million yuan in shares this year, potentially pushing the dividend yield above 5%. Since its IPO, Yuto has distributed 2.85 billion yuan in cash dividends and repurchased 650 million yuan in shares, totaling 3.5 billion yuan [23] - Long-term growth potential: Yuto benefits from cost advantages and higher product quality, which support its high profit margins and market share growth. The company is one of the few domestic paper packaging firms capable of supporting international clients' overseas expansion, with 8 overseas bases (including new factories in the Philippines and Mexico). Overseas production currently accounts for 20% of total output, with potential for further growth. The paper packaging industry is large but fragmented, with Yuto holding only a single-digit market share nationally, indicating significant growth potential. The company is also investing in smart factories, with 5 already operational and over 10 in the pipeline. These factors, combined with improving downstream demand and new client acquisitions, are expected to drive steady profit margin growth. Yuto's annualized ROE is around 15%, with potential to approach 20%. The report forecasts net profits of 1.61 billion, 1.82 billion, and 2.08 billion yuan for 2024-2026, with corresponding P/E ratios of 16x, 14x, and 12x [36] Financial Data and Forecasts - Current stock price: 27.51 yuan [6] - Total shares outstanding: 930.51 million [6] - Earnings per share (EPS): Forecasted at 1.72, 1.96, and 2.23 yuan for 2024-2026 [45] - Revenue: Forecasted at 17.09 billion, 19.14 billion, and 21.48 billion yuan for 2024-2026 [45] - Net profit: Forecasted at 1.61 billion, 1.82 billion, and 2.08 billion yuan for 2024-2026 [45] - P/E ratio: Forecasted at 16x, 14x, and 12x for 2024-2026 [45] - Dividend yield: Expected to exceed 5% considering share repurchases [23]