Investment Rating - The report initiates coverage with a "Buy" rating for the company [3][5]. Core Views - The company is positioned as a leading player in the packaging paper industry, with expectations for profit elasticity due to improving industry supply-demand dynamics, quality raw materials, and reduced capital expenditure pressures [3][8]. - The projected net profit for FY2024-2026 is estimated at 780 million, 2.68 billion, and 3.35 billion RMB, respectively, indicating a turnaround from negative to positive growth of +242% and +25% year-on-year [3][12]. Financial Summary - Revenue for the company from 2020 to 2026 is projected to grow from 51.34 billion RMB in 2020 to 80.81 billion RMB in 2026, with a notable decline of 12% in 2023 followed by a recovery [2][11]. - Gross profit is expected to improve from 1.53 billion RMB in 2023 to 9.54 billion RMB in 2026, reflecting a recovery in profitability [2][10]. - The company’s net profit is forecasted to recover from a loss of 238 million RMB in 2023 to 3.35 billion RMB in 2026, showcasing significant growth potential [2][12]. Industry Position - The company is recognized as the largest producer of boxboard paper in Asia, with a diverse product line including various types of packaging paper and a strong market presence in mainland China [15][19]. - The company has a well-established supply chain, covering upstream raw materials and downstream packaging factories, which enhances its competitive edge [3][8]. Growth Outlook - The report highlights that the peak of capital expenditure has passed, with expectations for a reduction in depreciation pressure and an increase in profit margins as the company enters a harvest phase [28]. - The company’s sales structure indicates that 49.5% of revenue comes from card paper products, with a strong focus on high-strength corrugated core paper and coated gray bottom whiteboard paper [18][19]. Valuation - The target price for the company is set at 4.4 HKD per share, based on a cautious approach using both PE and PB valuation methods [13][14].
玖龙纸业首次覆盖：守正出奇，龙头穿越周期