Xianhe(603733) 信达证券·2025-01-27 08:00Investment Rating - The investment rating for Xianhe Co., Ltd. is "Buy" [2][7]. Core Viewpoints - 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]. - Xianhe Co., Ltd. is positioned to benefit from its upstream resource integration and the gradual launch of its Guangxi and Hubei projects, which are expected to significantly enhance production capacity and profitability [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-grammage publishing paper [4][26]. Summary by Sections 1. Industry Overview - The special paper industry saw a production of 7.43 million tons and sales of 7.25 million tons in 2023, with an overall operating rate of 84.3% [3][16]. - The industry is characterized by a significant increase in export volume and a decline in import volume, indicating a favorable supply-demand relationship compared to bulk paper [3][16]. 2. Company Development - Xianhe Co., Ltd. has expanded its product matrix and production capacity since its establishment in 1997, now producing over 1.6 million tons annually across various special paper products [11][12]. - The company has a unique corporate culture that emphasizes stability and long-term development, with a concentrated ownership structure led by the Wang family [12][13]. 3. Competitive Advantages - Xianhe Co., Ltd. has a robust supply chain with self-owned and contracted forest land ensuring a stable supply of raw materials [4][25]. - The company has developed self-research production equipment that allows for flexible production of multiple paper types, enhancing its ability to respond to market demands [4][26]. 4. Financial Performance and Forecast - The company is expected to achieve a revenue of 10.07 billion yuan in 2024, with a year-on-year growth rate of 17.7% [8][42]. - The projected net profit for 2024 is 1.04 billion yuan, reflecting a significant recovery from previous years [8][42]. - The company's gross margin is anticipated to improve, reaching 15.4% in 2024, driven by increased self-produced pulp and cost improvements [8][42]. 5. Valuation - The historical PE ratio for Xianhe Co., Ltd. has fluctuated between 10X and 15X in recent years, with a projected PE of 10.5X for 2025 [7][38]. - The company is expected to maintain a strong growth trajectory, with a projected net profit of 1.77 billion yuan by 2026 [8][42].