Magnera (NYSE:MAGN) 2025 Conference December 02, 2025 02:50 PM ET Company ParticipantsCurt Begle - CEOConference Call ParticipantsRoger Spitz - Equity Research AnalystRoger SpitzPackaging as well as the chemicals sectors. Bank of America is pleased to host, actually, a presentation and fireside chat with Magnera, and have with us CEO Curt Begle in the audience. We'll probably get him to stand up here and see if he'll get himself. I'm just—thank you. And for business development and strategy investor relatio ...

Core Viewpoint - The report highlights the financial performance and operational strategies of Hangzhou Nobon Nonwoven Co., Ltd. for the first half of 2025, showcasing significant revenue growth and strategic adjustments in response to market challenges. Financial Performance - The company's operating revenue for the first half of 2025 reached CNY 1,340,167,520.27, a year-on-year increase of 33.35% compared to CNY 1,005,003,585.48 in the same period last year [2][3] - The total profit amounted to CNY 90,154,046.95, reflecting a 54.04% increase from CNY 58,527,817.12 in the previous year [2][3] - The net profit attributable to shareholders was CNY 65,327,963.61, up 48.33% from CNY 44,042,566.96 [2][3] - The net cash flow from operating activities was CNY 260,427,759.32, a substantial increase of 125.80% compared to CNY 115,335,741.88 [2][3] Industry Overview - The industrial textile industry in China showed resilience, with a prosperity index of 54.6 in the first half of 2025, indicating a stable growth environment [3] - The production of non-woven fabrics reached 3.31 million tons in the first half of 2025, a year-on-year increase of 4.5%, with exports growing by 12% [3] - The overall revenue growth rate for the industrial textile sector was 2.4% in the first half of 2025, with a total profit decline of 4.7% [3] Operational Strategies - The company has focused on expanding its market presence in non-U.S. regions, particularly Europe and Australia, to mitigate the impact of U.S. trade tensions [5][6] - The company has enhanced its production capabilities by upgrading to a smart factory model, which has improved efficiency and reduced costs [5][6] - The company has increased its R&D investment by 41.42% to CNY 48,707,249.92, aiming to innovate and adapt to market demands [2][3] Product Development - The company specializes in differentiated, personalized water-jet nonwoven materials, with applications in beauty care, industrial materials, and medical supplies [3][4] - The self-owned brand "Xiao Zhi Jia" achieved a revenue of CNY 2,094.37 million, marking a 69.97% increase, driven by social e-commerce and live streaming strategies [7][8] Market Challenges - The company faced significant challenges due to the U.S. trade war, which led to reduced orders from major clients in the second quarter of 2025 [5][6] - The overall industry is experiencing price competition and a decline in profit margins due to overcapacity and changing trade dynamics [3][18]

Investment Rating - The report gives a "Buy" rating for the company with a target price of 20.90 CNY, corresponding to a PE ratio of approximately 33 times for 2025 [4][14][6]. Core Viewpoints - The company is a leading player in the domestic water-jet non-woven fabric industry, demonstrating a long-term commitment to craftsmanship. The penetration rate of water-jet non-woven fabrics is on the rise, with diverse downstream applications such as wet wipes and oral nicotine pouches showing rapid growth [12][51][67]. - The company's three main business segments—roll materials, products, and proprietary brands—are developing synergistically, with strong performance in 2024 and Q1 2025. The roll material segment is expanding its capacity for differentiated and flushable materials, while the product segment, led by Guoguang, is gradually entering high-margin clients [4][12][33]. Company Overview - Founded in 2002, the company specializes in the R&D, production, and sales of differentiated and personalized water-jet non-woven materials and products. Its products are primarily used in beauty care, industrial materials, household cleaning, and medical materials [22][23]. - The company achieved a revenue of 2.24 billion CNY in 2024, representing a year-on-year growth of 16.8%, and a net profit attributable to shareholders of 95.23 million CNY, up 15.2% year-on-year. In Q1 2025, revenue and net profit grew by 39.1% and 48.6% respectively [1][4][23]. Industry Situation - The water-jet non-woven fabric market is characterized by high demand due to its breathable, soft, lightweight, and antibacterial properties, making it suitable for disposable consumer products and beauty care markets. The production of water-jet non-woven fabrics reached 151,000 tons in 2023, with a compound annual growth rate (CAGR) of 18.6% from 2018 to 2023 [2][55]. - The Chinese wet wipes market is projected to reach 12.92 billion CNY in 2024, with a CAGR of 5.0% from 2024 to 2029, indicating significant growth potential in this segment [2][68]. Business Highlights - The roll material segment has advanced production lines and strong technical innovation capabilities, with the company being the only one in China capable of mass-producing flushable materials for the U.S. market. The company is increasing the proportion of differentiated and flushable materials in its production [3][12]. - The product segment, primarily through its subsidiary Guoguang, has a comprehensive product line for wet wipes, achieving a revenue growth of 26.6% in 2024 and over 40% in Q1 2025. Guoguang is expanding its partnerships with major retailers and acquiring new clients [3][12]. - The proprietary brand "Xiaozhijia" is rapidly growing, with a revenue increase of 80.6% year-on-year in 2024, supported by the company's technical strength [3][12]. Profit Forecast and Valuation - The company is expected to achieve revenues of 2.62 billion CNY, 3.10 billion CNY, and 3.60 billion CNY in 2025, 2026, and 2027 respectively, with year-on-year growth rates of 17.31%, 18.09%, and 16.25%. Net profits are projected to be 112 million CNY, 136 million CNY, and 163 million CNY for the same years, with growth rates of 17.61%, 21.35%, and 19.80% respectively [4][14][5].