SUN PAPER(SZ:002078) Tianfeng Securities·2025-05-08 03:44Investment Rating - The investment rating for the company is "Buy" with a 6-month outlook maintained [5]. Core Views - The company reported Q1 2025 results that exceeded expectations, with a revenue of 9.9 billion and a net profit of 0.89 billion, showing a year-on-year decline of 2.8% and 7.3% respectively, but a quarter-on-quarter increase of 37.9% [1]. - The report anticipates continued improvement in profits for Q2 2025, driven by price increases in pulp and paper products and a decrease in raw material costs [1]. - The company is expanding its production capacity and actively developing its operations in Laos, aiming for a sustainable forestry area of 120,000 hectares by 2030 [3]. Financial Performance - For Q1 2025, the gross margin was 15.78%, down 2.2 percentage points year-on-year but up 0.9 percentage points quarter-on-quarter [1]. - The company expects net profits for 2025 to reach 3.62 billion, with corresponding P/E ratios of 11X, 9X, and 8X for the years 2025, 2026, and 2027 respectively [4]. - Revenue projections for 2025 are estimated at 43.44 billion, reflecting a growth rate of 6.67% [4]. Market Conditions - The average market price for double glue paper in Q1 2025 was approximately 5,200 yuan/ton, a year-on-year decrease of 10% but a quarter-on-quarter increase of 3% [1]. - The average market price for corrugated paper was about 3,600 yuan/ton, showing a year-on-year decline of 2% and a quarter-on-quarter increase of 3% [2]. Capacity Expansion - The company is steadily expanding its production capacity, with several projects expected to commence trial production in Q4 2025 [3]. - The Laos forestry development is progressing well, with a historical high in afforestation area achieved in 2024 [3].