Investment Rating - The report assigns an "Accumulate" rating for the company, marking its first coverage [3][7]. Core Viewpoints - The company, Hengxin Life, specializes in paper and plastic dining utensils and is actively expanding its biodegradable product offerings, which opens up growth opportunities [7]. - The company has shown steady revenue and net profit growth, with a CAGR of 30.4% and 40.1% respectively from 2021 to 2024 [7][28]. - The market for dining utensils is benefiting from increased downstream demand, particularly for biodegradable products, which are becoming a significant trend in the industry [9][40]. Financial Data and Profit Forecast - Total revenue is projected to reach CNY 1,594 million in 2024, with a year-on-year growth rate of 11.9% [2]. - The net profit attributable to the parent company is expected to be CNY 220 million in 2024, reflecting a 2.8% increase year-on-year [2]. - The company’s gross margin is forecasted to be 26.3% in 2024, with a return on equity (ROE) of 21.0% [2][28]. Industry Overview - The dining utensils market is experiencing robust growth driven by increased consumer demand, with the retail sales of China's catering industry expected to reach CNY 5.57 trillion in 2024, a 5.3% increase year-on-year [9][40]. - The market for ready-to-drink coffee and new-style tea is rapidly expanding, with significant growth rates projected for the coming years [42][43]. - The industry is characterized by a low entry barrier and a fragmented market, with high-end products maintaining better profit margins due to brand loyalty and advanced production capabilities [48]. Company Competitive Advantages - The company possesses a comprehensive supply chain and core processing technologies, enabling it to meet diverse customer needs effectively [7][15]. - It has established strong relationships with high-profile clients such as Luckin Coffee, Starbucks, and major fast-food chains, which contribute to its revenue stability [7][15]. - The company’s biodegradable product revenue is expected to account for 54.7% of total revenue in 2024, highlighting its commitment to sustainability [9][17]. Profitability and Valuation - The forecasted net profits for 2025, 2026, and 2027 are CNY 262 million, CNY 321 million, and CNY 390 million respectively, with year-on-year growth rates of 19.4%, 22.4%, and 21.5% [2][7]. - The current market capitalization is estimated at CNY 7.1 billion, with corresponding price-to-earnings (PE) ratios of 27, 22, and 18 for the years 2025 to 2027 [7][28].
恒鑫生活（301501）：深耕纸质与塑料餐饮用具，可降解产品打开成长空间