Wuzhou Special Paper(SH:605007) EBSCN·2024-04-25 11:02Investment Rating - The report maintains a "Buy" rating for the company, indicating a positive outlook for future performance [10][19]. Core Views - The company has shown significant improvement in gross margin, with a gross margin of 13.0% in Q1 2024, up 9.5 percentage points year-on-year, despite a slight decline of 2.2 percentage points quarter-on-quarter [2]. - The company’s revenue for Q1 2024 reached 1.73 billion yuan, a year-on-year increase of 37.2%, and it achieved a net profit attributable to shareholders of 134 million yuan, marking a return to profitability [9][25]. - The integration of pulp and paper production is accelerating, with new production capacities coming online, which is expected to enhance long-term profitability stability [10]. Financial Summary - Revenue (in million yuan): 5,962 in 2022, 6,519 in 2023, projected 8,049 in 2024E, 10,615 in 2025E, and 12,053 in 2026E, reflecting a growth rate of 61.59% in 2022 and a more moderate 13.54% in 2026 [3][5]. - Net profit (in million yuan): 205 in 2022, 273 in 2023, projected 554 in 2024E, 716 in 2025E, and 843 in 2026E, with a notable increase of 103.02% in 2023 [3][5]. - Earnings per share (EPS): 0.51 in 2022, 0.68 in 2023, projected 1.37 in 2024E, 1.77 in 2025E, and 2.09 in 2026E [3][5]. Market Data - Total shares outstanding: 404 million [4]. - Current stock price: 15.79 yuan [11]. Production Capacity and Growth - The company has expanded its production capacity significantly, with new lines for food packaging paper and digital transfer paper contributing to increased sales [25]. - The company’s self-produced pulp capacity is expected to ramp up, which will help smooth costs during periods of rising pulp prices [10].