Xianhe(SH:603733) SINOLINK SECURITIES·2025-08-07 06:38Investment Rating - The report maintains a "Buy" rating for the company, indicating an expected price increase of over 15% in the next 6-12 months [5][12]. Core Insights - The company is investing approximately 11 billion RMB in an integrated bamboo pulp and paper project in Sichuan, aiming for a production capacity of 800,000 tons of bamboo pulp and 1.2 million tons of high-performance paper materials annually. The first phase is expected to be operational within three years [2]. - The trend of replacing traditional plastic packaging with pulp/bamboo pulp is gaining momentum, supported by environmental policies and technological advancements in bamboo pulp production, which is expected to significantly expand the market size [2]. - The company has a substantial inventory of pulp, which is anticipated to improve profit margins as pulp prices stabilize and recover [3]. - The full operation of the company's bases in Guangxi and Hubei is expected to enhance its integrated supply chain, significantly increase production capacity, and improve market share [4]. Summary by Sections Company Overview - The company is focusing on an integrated bamboo pulp and paper project with a total investment of about 11 billion RMB, targeting a production capacity of 800,000 tons of bamboo pulp and 1.2 million tons of high-performance paper materials annually [2]. Market Analysis - The shift towards pulp/bamboo pulp as an eco-friendly alternative to plastic is becoming more pronounced, with increasing demand in sectors such as food service and healthcare, leading to a broader application of pulp products [2]. Financial Projections - Revenue forecasts for 2025-2027 are 12.91 billion RMB, 15.26 billion RMB, and 17.74 billion RMB, representing year-on-year growth rates of 25.70%, 18.14%, and 16.25% respectively. Net profit is projected to reach 1.21 billion RMB, 1.46 billion RMB, and 1.77 billion RMB during the same period, with corresponding growth rates of 20.53%, 20.99%, and 20.74% [5][10]. - The expected earnings per share (EPS) for 2025-2027 are 1.71 RMB, 2.07 RMB, and 2.50 RMB, with current price-to-earnings (P/E) ratios of 10, 8, and 7 respectively [5][10]. Production Capacity and Integration - The company has successfully launched production lines in Hubei and Guangxi, with significant output already achieved. Future expansions are planned to further enhance production capabilities [4]. - The company is also developing 300,000 acres of its own forest land and has access to an additional 1 million acres of state-owned forest land to ensure a stable supply of raw materials [4].