Xianhe(603733) 信达证券·2025-01-27 08:09Investment Rating - The investment rating for the company is "Buy" [2][7]. Core Insights - The special paper industry is experiencing an upward trend, with production and sales increasing by 3.8% and 3.1% year-on-year, respectively, in 2023 [3][16]. - The company is expanding its production capacity significantly, with new projects in Guangxi and Hubei expected to contribute over 90 million tons of paper and pulp capacity [5][32]. - The company has a strong market position in niche markets, with a market share exceeding 45% in tobacco paper and over 90% in low-quantity publishing materials [4][29]. Summary by Sections 1. Growth Momentum and Industry Position - The company has a well-established product matrix and is expanding its production capacity steadily, with a total annual production capacity exceeding 1.6 million tons by 2024 [11]. - The company has a unique corporate culture that emphasizes stability and long-term development, with the Wang family controlling 78.3% of the shares [12]. 2. Industry Understanding - The special paper industry is seeing improved market conditions, with a concentration ratio (CR9) of 59.2% in 2023, indicating a stronger market position for leading companies [3][16]. 3. Competitive Advantages - The company has a robust supply chain for raw materials, with plans to secure 1 million acres of state-owned forest land by 2025 [4][25]. - The company leads in several niche markets, including tobacco and low-quantity publishing materials, which enhances its customer base [4][26]. 4. Short-term Performance - The company is expected to see a sales increase in Q4 2024, benefiting from the gradual implementation of its Guangxi and Hubei projects [5][30]. 5. Growth Sources - The new projects in Guangxi and Hubei are projected to significantly increase production capacity, with a growth rate of over 30% expected by 2025 [5][32]. 6. Current Cycle Position - The company is at a turning point in its profit cycle, with expectations of improved profitability driven by cost reductions and increased self-supply of pulp [6][34]. 7. Valuation System - The company's valuation is expected to recover, with a projected PE ratio of 10.5x for 2025, reflecting its strong market position and growth potential [7][38]. 8. Profit Forecast and Investment Rating - The company is projected to achieve net profits of 1.04 billion, 1.44 billion, and 1.77 billion yuan for 2024, 2025, and 2026, respectively, with corresponding PE ratios of 14.5x, 10.5x, and 8.5x [7][42].