Bohui Paper (600966) in-depth report: industry & company embark on transformation
The supply and demand & competition pattern has improved, and the prosperity of white paper continues to rise. The recent APP intends to acquire Bohui Paper. If the merger is smooth, the production capacity of APP white paper will account for more than 50% of the total domestic white paper capacity.
As a high-end packaging paper product, white cardboard has an annual demand of nearly 1,000 millimeters. Against the background of a weak balance between supply and demand in the industry, the profitability of paper products has changed in the past three years due to competition among leading companies.
If the integration progresses smoothly, the current high level of profitability of white cardboard will continue and the range of change will decline; from a medium and long-term perspective, CR3’s nearly 90% competitive landscape or a new capacity expansion will be more reasonable.Therefore, under the influence of factors such as whiteboard capacity reduction, the industry’s profit center can be expected to rise.
White card leader, diversification strategy opens a new chapter in development Bohui is the second largest white paperboard 北京桑拿洗浴保健 company in China, with over 200 tons of white paperboard production capacity, accounting for more than 20% of the total domestic white paperboard production capacity; and the company continues to enrich its product lineThe expansion of the box board / corrugated / electrostatic copy capacity is 50/50/45 positions; meanwhile, the company actively lays out wood pulp production capacity and expands the chemical and chemical pulp by more than 100 mm.
With the intensive expansion of new production capacity (accumulated capacity growth of more than 50% in 2019), the company has effectively ensured profit stability while improving market pricing power.
Industry prosperity and corporate governance are expected to improve. Elasticity of performance is expected. There will still be some upside for white cards and wood pulp. 佛山桑拿网 Among them, white cards benefit from improved supply and demand and competition. Wood pulp benefits from increased global demand for pulp.Industry inventory is down.
Driven by this, Bohui’s performance is resilient.
According to the calculation of the Yangtze River Light Industry, every 100 yuan increase in ton price of white card / wood pulp will bring about 1.
Net profit increased by 6/100 million. Based on 2018, net profit increased by 63% / 40%, respectively.
At the same time, if APP successfully takes over Bohui, as a global papermaking leader, it is expected that through international management experience and rich wood pulp support, the company’s operating efficiency and profitability will continue to improve.
Investment suggestions and estimation analysis Expansion of scale, improvement of governance, expected resonance of the industry recovery, Bohui’s performance elasticity is expected, and it is estimated that storage upside is available.
1) The company’s new production capacity is concentrated in 2019, and the papermaking capacity has nearly doubled. Among them, the white cardboard production capacity increased by 50%, which directly benefited from the recovery of the industry. 2) The corporate governance optimization space, with the entry of APP, the company’s operating efficiency and financing channelsIndustrial resources are expected to be further optimized, which will increase the profitability; 3) Improved competition, improved expansion, optimized supply and demand layout, the profit center of paper products will move up and gradually narrow.
If APP integrates Bohui, its market share will reach 50% +, CR3 will also be close to 90%, and the high concentration layout will maintain reasonable production capacity.
On the demand side, consumption upgrades and “plastic limit orders” will drive steady demand growth.
We expect that the company’s EPS will be 0 in 2019-2021.
09 yuan, corresponding PE is 26/8 / 6X respectively. Under the great changes in the industry and the company, we are optimistic about the company’s predicted upside potential, covering for the first time, and giving a “buy” rating.
Risk Warning: 1.
APP acquisition failed antitrust review; 2.
The white cardboard industry has significantly expanded production.