Group 1 - The stock price of Hengxin Life on July 30 was 52.60 yuan, down by 2.21 yuan, representing a decline of 4.03% [1] - The trading volume on that day was 45,931 hands, with a transaction amount of 244 million yuan [1] - Hengxin Life operates in the household light industry, focusing on the research, production, and sales of disposable dining utensils, including paper and plastic products widely used in catering and takeout sectors [1] Group 2 - The company stated on the interactive platform that its production and operational status is normal, and it continues to strengthen its competitive advantages in the industry [1] - On the same day, the net outflow of main funds was 53.06 million yuan, accounting for 2.88% of the circulating market value [1]

Investment Rating - The report assigns an "Accumulate" rating for the company, marking its first coverage [3][7]. Core Viewpoints - The company, Hengxin Life, specializes in paper and plastic dining utensils and is actively expanding its biodegradable product offerings, which opens up growth opportunities [7]. - The company has shown steady revenue and net profit growth, with a CAGR of 30.4% and 40.1% respectively from 2021 to 2024 [7][28]. - The market for dining utensils is benefiting from increased downstream demand, particularly for biodegradable products, which are becoming a significant trend in the industry [9][40]. Financial Data and Profit Forecast - Total revenue is projected to reach CNY 1,594 million in 2024, with a year-on-year growth rate of 11.9% [2]. - The net profit attributable to the parent company is expected to be CNY 220 million in 2024, reflecting a 2.8% increase year-on-year [2]. - The company’s gross margin is forecasted to be 26.3% in 2024, with a return on equity (ROE) of 21.0% [2][28]. Industry Overview - The dining utensils market is experiencing robust growth driven by increased consumer demand, with the retail sales of China's catering industry expected to reach CNY 5.57 trillion in 2024, a 5.3% increase year-on-year [9][40]. - The market for ready-to-drink coffee and new-style tea is rapidly expanding, with significant growth rates projected for the coming years [42][43]. - The industry is characterized by a low entry barrier and a fragmented market, with high-end products maintaining better profit margins due to brand loyalty and advanced production capabilities [48]. Company Competitive Advantages - The company possesses a comprehensive supply chain and core processing technologies, enabling it to meet diverse customer needs effectively [7][15]. - It has established strong relationships with high-profile clients such as Luckin Coffee, Starbucks, and major fast-food chains, which contribute to its revenue stability [7][15]. - The company’s biodegradable product revenue is expected to account for 54.7% of total revenue in 2024, highlighting its commitment to sustainability [9][17]. Profitability and Valuation - The forecasted net profits for 2025, 2026, and 2027 are CNY 262 million, CNY 321 million, and CNY 390 million respectively, with year-on-year growth rates of 19.4%, 22.4%, and 21.5% [2][7]. - The current market capitalization is estimated at CNY 7.1 billion, with corresponding price-to-earnings (PE) ratios of 27, 22, and 18 for the years 2025 to 2027 [7][28].