Zhongshun Jierou (002511): Performance in line with expectations optimistic about pulp price downturn profit

Zhongshun Jierou (002511): Performance in line with expectations optimistic about pulp price downturn profit

The company released its 18-year annual report: the report included company revenue 56.

79 trillion, an increase of 22 over the same period last year.

43%, net profit attributable to mother 4.

07 billion, an increase of 16 over the same period last year.

60%, net profit after excluding non-recurring gains and losses.

9.3 billion, an increase of 20 over the same period last year.


Among them, Q4 achieved revenue of 15 in a single quarter.

9.8 billion, an annual increase of 24.

20%, net profit attributable to mother 0.

9.4 billion, down 8 previously.

08%, performance growth in line with expectations.

The product structure has been continuously upgraded and the achievements in channel construction have been satisfactory.

In 2018, the company’s tissue paper income was 55.

780,000 yuan, 45 compared with the same period last year.

4.1 billion increased by 22.

84%, the report pointed out that the company has further optimized the product structure and increased the proportion of high-end products. Among them, the sales revenue of facial, lotion and natural wood series products accounted for more than 60%.

In terms of channel construction, the company’s four major channels of GT, KA, AFH, and EC go hand in hand. The marketing network has covered the whole country, especially the 18-year growth performance of e-commerce channels.

The company continued to strengthen the marketing of key brands, launched new high-margin personal care products, and comprehensively deepened channel reforms, effectively consolidating steady revenue growth.

Pulp prices are expected to decline, and gross margin is expected to improve.

In 2018, the price of pulp remained high. During the year, the average price of coniferous pulp and broad-leaved pulp reached USD 889 / ton and USD 782 / ton, which was affected by the proportion of pulp cost to the company’s total cost of 50% -60%.The company’s gross profit margin dropped significantly, with gross margins of Q1-Q4 being 38.

84%, 34.

38%, 33.

18%, 30.


Since the second half of 2018, the weak demand and the high inventory level have led to a decline in the price of pulp since July 2018. The current price of coniferous pulp is $ 733 / ton (19% lower than the previous year’s high) and the current price of broadleaf pulp is 703.USD / ton (down 11% from last year’s high), the company’s gross margin is expected to stabilize and recover.

Significant cost control and outstanding economies of scale.

In terms of expense ratio, the company’s total expense ratio during the period.

28%, a decrease from the same period last year.

19pct, good cost control.

Specifically, the management expense ratio is basically the same as the financial expense ratio, while the sales expense ratio is 17.

84% is down from last year.

26pct, mainly due to the company’s three-year sales channel construction, the effect of scale began to appear, and the sales expense rate naturally dropped.

It is expected that through the company’s continuous improvement and optimization of sales channels, the sales expense ratio will continue to decline.

Production capacity continues to expand and expected performance growth.

The company completed Tangshan Branch 2 in 2018.

5 The expansion of the entry-level household paper project and the construction of the second phase of the Yunfu 12 period project continued to increase production capacity.

In the future, the company plans to further implement its capacity expansion strategy. Relying on its subsidiaries Jiangmen Zhongshun, Yunfu Zhongshun, Sichuan Zhongshun, Zhejiang Zhongshun, Hubei Zhongshun and Tangshan Branches, a nationwide formation of East, South, West, North and Central ChinaProduction layout, improve transportation efficiency and reduce transportation costs. Constraints on top and bottom interests, equity incentives stimulate vitality.

In December 2018, the company launched a new round of equity incentive programs, with a total of 4481 equity incentives.

60,000 shares, accounting for about 3 of the company’s total share capital.

48%, incentives totaled 4681 people, covering the company’s middle management and technical staff.

Including 1959.

850,000 stock budgets and 2521.

750,000 carbonic acid stocks.

From the perspective 淡水桑拿网 of unlocking the performance of equity incentive performance, the company’s revenue growth rate is expected to be no less than 15% / 18% / 16% in 19-21, showing development confidence.

Earnings forecast and investment grade: We expect the company’s revenue in 19-21 will be 67.

1.7 billion, 79.

00 ppm and 93.

45 ppm, with annual growth rates of 18 respectively.

3%, 17.

6% and 18.

3%; net profit attributable to mothers is realized separately.

1.3 billion / 6.

21 ppm / 7.

4.4 billion, the previous growth rate was 26.

0%, 21.

2% and 19.

8%, PE corresponds to the current maximum of 25 respectively.

63X, 21.

15X and 17.

65X, maintain “Buy” rating.

Risk warning: raw material prices fluctuate, channel expansion is less than expected, and new product launches are less than expected