Xianhe(SH:603733) GOLDEN SUN SECURITIES·2024-04-30 06:32Investment Rating - The report maintains a "Buy" rating for Xianhe Co., Ltd. (603733.SH) [5] Core Views - The company reported a significant improvement in profitability, with Q1 2024 revenue reaching 2.209 billion yuan, a year-on-year increase of 20.2%, and a net profit attributable to shareholders of 269 million yuan, up 120.1% year-on-year [3][4] - The company is experiencing a price increase trend, with controllable costs and an overall profit per ton expected to remain high [3][4] - The integration of pulp and paper production is accelerating, with new production capacities expected to enhance cost advantages [12] Financial Performance - In Q1 2024, the gross profit margin was 18.0%, an increase of 8.0 percentage points year-on-year, and the net profit margin was 12.2%, up 5.5 percentage points year-on-year [4] - The company’s operating cash flow for Q1 2024 was -414 million yuan, an improvement of 267 million yuan year-on-year [4] - The forecast for net profit attributable to shareholders for 2024-2026 is 1.071 billion, 1.442 billion, and 1.809 billion yuan, respectively, with corresponding P/E ratios of 12.3X, 9.1X, and 7.3X [4][13] Operational Insights - The company’s inventory turnover days as of Q1 2024 were 146.60 days, reflecting an increase of 18.47 days year-on-year, indicating a focus on strengthening raw material procurement [4] - The company is set to launch new production lines in Hubei and Guangxi, which will add approximately 600,000 tons of paper production capacity [12] Market Position - The total market capitalization of Xianhe Co., Ltd. is approximately 13.16 billion yuan, with a total share capital of 705.98 million shares [5] - The stock price as of April 29, 2024, was 18.64 yuan [5]