Regional location superior profitability stronger investment value analysis report investment key points:
Industry rapid development, the supply of high-grade products exceeds the demand: domestic and foreign paper industry development basically and the GDP to keep pace. China's paper industry in the past 20 years to maintain rapid development, but so far there is still a large gap between supply and demand need to be imported to make up.
Jingxing Paper's leading product boxboard is the industry's largest demand for products, although in recent years the growth rate of boxboard production is higher than the rate of the paper industry as a whole, but imports are still maintained at 1 million tons / year or so, the gap between high-grade products is even greater.
Domestic paper industry competitiveness improved rapidly, the degree of dependence on international wood pulp decreased significantly: due to a large number of new production lines in operation, coupled with increasing self-sufficiency of raw materials, product competitiveness is increasing. 2005 in the production of paper and paperboard growth of 13.13%, imports of wood pulp grew by only 3.69%; imports of 5.24 million tons of paper, a year-on-year decline of 14.7%; exports of paper and paperboard 193.9 million tons, an increase of 55.4 percent.
The company has a unique advantage: the company's operating mechanism is flexible and efficient, the regional location is superior, the product sales price and gross profit level is relatively stable or even upward, environmental protection outsourcing and lower costs, raising funds for the project is promising. But be alert to the risk of overcapacity.
The next two years the company's performance will grow significantly: with the company in July 2007 to raise funds for the project put into operation, the company in 2007, 2008 two years of revenue from main business compound annual growth rate of 47.1%, net profit increased by an average of 51.8% per annum in 2007 earnings per share of 0.36 yuan, in 2008 0.59 yuan.
Valuation range: we mainly A-share representative of the company's P/E ratio, P/B ratio, EV / EBITDA as a reference and the DCF method of valuation results for the average, taking into account the Hong Kong market has a positive role in its demonstration, will be determined as a range of: 3.60-7.00 yuan, the base value of 5.30 yuan, according to 2005 The benchmark value is 5.30 yuan, and the PE value is 21 times based on the fully diluted earnings per share of 0.25 yuan in 2005.
Range of inquiry: we take the benchmark value of 5.30 yuan per share as the center, taking full account of the market performance of the paper industry sector and the recent SME IPO subscription factors, the range of inquiry is determined as 3.86-4.63 yuan. According to the 2005 results of fully diluted earnings per share of 0.25 yuan, the issuance of price-earnings ratio of 15.44-18.52 times.
After the listing of the operation recommendations: we expect Jingxing Paper first day average price should be in the vicinity of 6 yuan, even if the inquiry ceiling 4.63 yuan, up about 30%. If it reaches more than 6.50 yuan, you can consider selling, close to the benchmark value of 5.30 yuan near you can consider intervening according to market conditions.
1, the company's profile Jing Xing Paper is located in Jiaxing City, Zhejiang Province, its predecessor is Zhejiang Jing Xing Paper Group Co. Overall change to zhejiang jingxing paper industry co., ltd. until it stabilizes.
Prior to the issue of the company *** there are six shareholders, Mr. Zhu Zailong, a natural person, Shanghai MORIHUA Joint Stock Company, Japan Paper Company Limited, Japan Paper & Pulp Corporation, Pinghu Caoqiao Township Collective Assets Management Company and Pinghu Electric Power Industrial Company. Although Mr. Zhu Zailong has the same proportion of shareholdings as Malcolm Wah, Zhu Zailong is the Chairman of the Company and the de facto controller of Jingxing Paper as Nippon Paper Company Limited and Nippon Paper & Pulp Trading Company Limited have fully entrusted Zhu Zailong with the exercise of shareholders' powers.
The company's scope of business is the production and sale of packaging paper, and its main products include kraftliner board, high-strength corrugated paper, white kraft cardboard, and cardboard boxes. As of December 31, 2005, the company registered 445 employees, annual production capacity of 320,000 tons, total assets of 1.09 billion yuan, revenue of 950 million yuan, net profit of 56.64 million yuan, the total share capital of 15,000,000 shares before the issue, earnings per share 0.38 yuan. The company's six promoter shareholders are committed to the listing of 36 months after the company not to reduce its shares held before the issue.
The company is recognized by the China Packaging Federation of China's leading packaging enterprises, in the country according to the sales revenue and production ranked around 20 near the production capacity of 220,000 tons of high-grade kraftlinerboard, in the field of the country's similar producers in the fourth. The company is currently and Nine Dragons Paper, Lee & Man Paper with the China Pulp and Paper Business Network designated guide price information publishers, in product pricing has a certain degree of market dominance. Jingxing brand kraft containerboard was awarded the title of China Famous Brand by China Brand Development Promotion Committee. The joint-stock company was awarded the title of Zhejiang Province Integrity Demonstration Enterprise by the People's Government of Zhejiang Province; recognized as the first batch of four-star environmental protection credit enterprise by the Environmental Protection Bureau of Zhejiang Province; awarded as Jiaxing City Excellent Trustworthy Enterprise by the People's Bank of China, Jiaxing City Branch; recognized as AAA credit enterprise by the Agricultural Bank of China, Zhejiang Branch, and awarded as the title of the best credit customer. The joint-stock company has passed ISO9002 quality management system and ISO14001 environmental management system certification.
2, the background of industry development: China's paper industry competitiveness to improve the overall 2.1 Huge industry development space of China's paper industry after decades of construction and development, has made great achievements, until the end of 2005, there are about 3,200 production enterprises, 1991-2005, 14 years, China's total paper and paperboard production and consumption by an average of 9.26% and 9% per annum, respectively. An average annual growth rate of 9.26% and 9.72%, China's paper industry is the world's fastest-growing country in recent years, the current production and sales have ranked second in the world. Although its growth rate is higher than the growth rate of GDP, but still can not meet the needs of the national economic development, the annual need to import a large number of high-grade high-quality paper to meet the packaging, printing, office and other paper needs. Although some varieties of supply and demand pressure has gradually increased since 2005, but still belongs to the structural contradictions, the total amount is still relatively loose, we expect this situation to continue to 2010 or so.
2.2 containerboard demand growth faster than the industry average domestic containerboard consumption growth and the paper industry as a whole and the GDP shows a strong positive correlation.
It is expected that China's economy in the Eleventh Five-Year Plan period will continue to maintain a rapid and steady development, 20062010 period, the average annual growth rate of domestic GDP maintained at 7.58.5%, in 2005, the boxboard consumption of 11 million tons or so, conservatively estimated that the average annual consumption of boxboard industry incremental increase will be maintained at around 82-1 million tons! The company's development has provided a larger space for the enterprise.
From 2001 to 2005, China's production of containerboard grew 113%, an average annual compound growth rate of 20.8%, consumption of 102% growth, an average annual compound growth rate of 19.2%, whether production or consumption growth has greatly exceeded the growth of the domestic GDP, but also faster than the average rate of growth of the paper industry. 2005 imports of domestic containerboard is still 1.36 million tons, accounting for the total amount of domestic imports. 1.36 million tons, accounting for 26% of total domestic imports, accounting for 12.4% of the consumption of containerboard.
3, the company's business and financial situation analysis 3.1 the company's production growth in previous years and the profitability of subsidiaries Jingxing paper industry in 2002 the beginning of the year, the production capacity of 100,000 tons of packaging cardboard, paper company in October 2002 with an annual output of 180,000 tons of kraftliner production line put into operation, the production capacity of 220,000 tons; July 2002 acquisition of 51% of the equity of the Nanjing Jingxing, as well as the end of 2002 Pinghu Jingxing 1 new carton production line put into operation. At present, the company has a production capacity of 220,000 tons of kraftliner board, 40,000 tons of high-strength corrugated paper, 50,000 tons of white kraft card, 80 million square meters of cardboard boxes. 07 July fund-raising project of 300,000 tons of recycled environmental protection paper production, the company's production capacity of 620,000 tons.
The company's main business is very prominent, the proportion of paper products as high as 99.1%, other business income accounted for only 0.9%.
The company's main business now comes from three holding subsidiaries. Holding subsidiary Pinghu Jingxing and Nanjing Jingxing main products are cartons, accounting for about 17% of net profit, paper company's main products are kraft boxboard and corrugated paper, accounting for more than 60% of net profit, white kraft card for the joint-stock company directly, accounting for about 20% of net profit.
3.2 The company's main business income in the past three years, the company's sales revenue in the past three years were 740 million yuan, 850 million yuan and 950 million yuan, with a compound annual growth rate of 13.3%. The main reason is that the company does not have a large project put into production.
3.3 The company's net profit and growth in the past three years the company's net profit in the past three years were 42.55 million yuan, 47.59 million yuan and 56.64 million yuan, a compound annual growth rate of 15.5%.
3.4In 2004, the company's main products, sales volume, sales price, production and sales rate of the company's main products, production and sales rate of the company's main products are more than 97%, showing that the market sales are good.
3.5 the company's main products in the past three years, the average price trend with the rapid development of the domestic paper industry, the market supply capacity to enhance the fierce competition, the company's main products, not only did not decline in sales prices, but also rose, on the one hand, the kraftliner industry, the market space is huge, on the other hand, it also shows that the company's higher level of management in the selection of the project has a unique vision. . Avoided many products in the industry's fierce competition.
3.6 The main raw material composition and price trends of the company's production of raw materials are mainly waste paper and wood pulp, waste paper by weight accounted for about 93%, wood pulp accounted for about 7%; by the amount of waste paper accounted for about 79%, wood pulp accounted for about 21%; the supply of raw materials and the supply of prices affected by the climate, the international political situation and supply and demand in the international market.
In 2005, the joint-stock company and the paper company together imported waste paper accounted for 50.50% of the total purchases of waste paper, imported wood pulp accounted for 56.65% of the total purchases of wood pulp; January-June 2006, the joint-stock company and the paper company together imported waste paper accounted for 61% of the total purchases of waste paper, imported wood pulp accounted for 37% of the total purchases of wood pulp. Domestic waste paper is mainly purchased from local renewable resource enterprises. The Company has the right to import and export on its own, and imports waste paper from Japan, the United States and Europe on its own or through other import and export companies. Domestic wood pulp is mainly supplied by wood pulp producers such as Qingzhou Paper and Fujian South Paper, while imported wood pulp is mainly imported from Russia.
The company's production of electricity from the East China Power Grid, according to the actual use of electricity to the Pinghu City Power Operations Department to pay the electricity bill. 2003 since the second half of the year, the East China generally appeared in the power supply situation, although up to now has not yet caused a major impact on the company's production and operation, but if the contradiction between the economic growth and the supply of electricity to further highlight the production and operation of the company will probably be adversely affected. The Company is located in Zhejiang Province. The Company is located in Zhejiang Province, with the overall economic growth in Zhejiang Province, in order to meet the growing demand for electricity in the region, Zhejiang Province in 2003, that is, the development of three to ensure that the two power supply construction goals: one is to ensure that 10 million kilowatts, and 12 million kilowatts of power installed power put into operation, that is, put into operation 11 projects; two is to ensure that 10 million kilowatts, and 12 million kilowatts of power supply projects started construction, that is, more than 10 million kilowatts of power supply projects. Above the power project started construction, that is, started 8 projects; three is to ensure that 10 million kilowatts of preparatory projects for preliminary work. Once the above objectives are completed as scheduled, Zhejiang Province, power installed capacity will reach 45.62 million kilowatts, per capita possession of installed capacity close to 1 kilowatts, the commissioning of these projects will greatly increase the capacity of power supply, thereby providing a strong guarantee for the company's fund-raising investment projects to meet the demand for electricity.
The Company's production steam comes from the Pinghu Thermal Power Plant, which currently has an annual steam production capacity of 1.38 million tons and an actual annual output of about 740,000 tons. The Company's current annual steam consumption is about 475,500 tons, and after the fund-raising investment project reaches production, the annual new steam consumption will be about 280,000 tons, therefore, the steam supply capacity of Pinghu Cogeneration Power Plant is fully capable of meeting the Company's demand for production steam after the fund-raising investment project reaches production.
In the cost composition of kraftliner board, the largest proportion of waste paper and wood pulp, from the cost of the value of the composition of waste paper and wood pulp in the ratio of 3-4:1, the price of waste paper has a significant impact on the cost of high and low. Most of the imported waste paper used by domestic paper companies are imported from the U.S., and because Jingxing Paper from the Japanese shareholders to introduce the use of Japanese waste paper paper technology, the use of Japan's unique waste paper paper technology, you can use the lower cost of Japanese waste paper. In terms of price, the U.S. waste paper is about 10% higher than Japanese waste paper, and the lower price of Japanese waste paper gives Jingxing Paper a relative cost advantage, thus making the gross profit margin of the product a leader in the industry.
3.7 The Company's consolidated gross profit margin and gross profit margin level by product The Company's consolidated gross profit margin has remained at a high level of over 19% over the last three years and one period due to the sustained sales of its leading products and more effective cost control. In particular, the gross profit margin of high-strength corrugated medium has improved significantly since 2005, mainly due to the completion of the 30,000-ton high-strength corrugated line technological reform project by the Paper Company in February 2005, which has significantly reduced production costs by utilizing the pulp waste generated by the Company for the production of corrugated medium, thereby significantly improving the gross profit margin of this product.
We selected the industry's profitability of the 7 listed and Jingxing Paper for comparison, the basic conclusion is comparable, the higher level of return on net assets on the one hand, Jingxing Paper capital utilization efficiency, but also with the company's current higher indebtedness is also quite related to the higher level of period expenses is due to the higher rate of financial expenses, and thus affect the level of net interest rate on sales increased. But it is worth noting that the company's gross profit level is high, with the company's fund-raising in place, the level of financial expenses down, the company's profitability will be enhanced.
3.8 Comparison of the company's solvency and operating capacity of the company's overall debt level is higher than the industry average, the current ratio, quick ratio is lower than the industry average, in the short-term solvency there is a certain degree of risk, mainly because the company's rapid development in recent years, the funds required for the company, in addition to their own accumulation, mainly relying on bank borrowing. But the company's operating capacity is much stronger than the industry average, capital efficiency is higher, while the company's cash flow from operating activities is also much higher than the average level of short-term debt repayment pressure to play a certain role in alleviating the role of the company's debt risk will be greatly reduced if the financing success.
4, the company's competitiveness and risk analysis 4.1 the company's competitiveness analysis 4.1.1 the company's position in the industry from the 2005 National Paper Association of domestic enterprises (including joint ventures and foreign-funded enterprises) ranked the comprehensive strength of the King of the paper industry production ranked 17th, 21st in sales revenue. From the point of view of subdivided varieties of kraftliner board, it ranks fourth in China. It should be said that this ranking is not ideal, the main reason is that in the past one or two years the company did not have a new production line put into operation, in 2007 after the fund-raising project put into operation, the output of that year will reach 500,000 tons in 2008, close to 750,000 tons? Raising funds 300,000 tons of new paper machine actual output of about 450,000 tons , the company's overall strength of the ranking will be a substantial increase.
4.1.2 The company's leading products, kraftliner market demand is expected to China's economy in the Eleventh Five-Year Plan period will maintain a rapid and steady development, in the period from 2006 to 2010, the average annual growth rate of the domestic GDP to maintain at 7.58.5 percent. Such rapid growth will inevitably give a strong impetus to consumption and export supporting the substantial growth in demand for transport packaging. 2005, the consumption of containerboard in 11 million tons or so, conservatively expected to increase the average annual consumption of the containerboard industry will remain in the 82-1 million tons or so, for the development of enterprises to provide a greater space.
Since the domestic demand for kraft containerboard is growing rapidly, and there are large imports, which attracts a lot of money into the field of kraft containerboard production, especially in the high-grade kraft containerboard, according to the China Paper Association's statistics, the next two years of new production capacity will reach 2.25 million tons or so, according to our previous demand forecasts, the containerboard industry, the average annual incremental consumption will be maintained at 82-100 million tons or so, coupled with the annual increase in consumption, the average annual incremental consumption will be maintained at 82-100 million tons or so. -1 million tons or so, plus about 1.35 million tons of imports each year can be replaced, it can be said that the domestic containerboard products are not oversupplied, the possible result is that by 2010 or so imports are completely replaced, domestic production and demand to reach a balance.
4.1.3 The main product profitability is stronger Jingxing Paper's main products for the A-grade kraft containerboard, of which 70% of the kraft containerboard ration in the 150 grams - 175 grams / per square meter, a higher grade and quality of products in the substitution of imported kraft containerboard as well as to meet the domestic kraft containerboard high-end customers to occupy the advantage of the products, and therefore its sales price and the domestic production of similar products, the sales price and the domestic production of the same products. Sales price and domestic production of similar products, compared with the A grade kraftliner selling price is about 150 yuan to 200 yuan / ton.
4.1.4 smooth management mechanism, superior geographical location of the company to give full play to the advantages of private enterprise operating mechanism flexibility, and constantly carry out enterprise management and personnel system reform and innovation. Years engaged in the production and operation of packaging paperboard, in the procurement of raw materials, cost control, inventory management, quality management, marketing management and performance management has formed an effective Jingxing management model. Over the years Jingxing Paper and most private enterprises, as in the process of the company's development by the shortage of funds constraints, if the issue is successful, can be expected with the commissioning of new projects, the company's comprehensive competitive strength will be significantly enhanced.
The company is located in China's largest and one of the most promising growth potential of the paper and paperboard consumer market in East China, the region's dense urban (the company's location in Shanghai, Hangzhou, Suzhou, the center of the three geographic scope), economically developed, prosperous trade and commerce, the people's standard of living is relatively high, and thus the growth in demand for packaging paperboard in the East China region has a solid economic foundation. At the same time, due to the large consumption of paper in the region, the corresponding amount of waste paper production is huge, providing the company with a broad product market and raw material market. In addition, the company is located in Zhapu port on Hangzhou Bay, near Shanghai, Jiangsu, land and water transportation is convenient, has the advantage of lower transportation costs relative to competitors, to facilitate the expansion of product sales radiation. Greatly save the company's raw materials, finished products in and out of the cost.
4.1.5 wholeheartedly create green paper industry Jingxing paper paper raw materials needed is mainly waste paper and wood pulp, the company and non-wood fiber as the main raw material compared to paper enterprises, the company in the production process of wastewater produced less, pollution is light, easy to manage. Since the establishment of the factory, the company attaches great importance to sewage treatment and other environmental protection issues and achieve better results, the use of wastewater recycling facilities, greatly reducing the amount of wastewater discharged. 2002 October the company established an environmental management system in line with the standard ISO14001 and obtained certification.
At the same time, paper packaging is economically cheap, light weight, easy to store, easy to process, waste can be degraded and easy to recycle, etc., is recognized as green packaging materials. With the increasing awareness of consumers of environmental protection, paper packaging has become an ideal substitute for other packaging materials.
At present, all of the wastewater discharged by the company is centrally treated through the Jiaxing City Joint Wastewater Treatment Network, and it is committed to providing Jingxing Paper with an incremental wastewater discharge of 1 million tons of capacity in the future. Due to the scale advantage of the pipeline network system, the sewage charges collected are lower than the industry's general company-owned sewage treatment daily operating costs. Lower fixed asset investment and operating expenses enable Jingxing Paper to maintain its cost advantage in environmental protection.
4.2 Risks of the company We believe that the company's biggest risk comes from the release of excess capacity in the industry. Although there is no fierce competition of oversupply in the kraft containerboard market in the near future, the serious price decline caused by the centralized release of production capacity of many paper products suggests that this risk exists.
In terms of high-grade packaging board, the market share of imported products to further increase the space is limited, mainly because the quality gap between domestic and foreign high-grade packaging board products is not large, the price of foreign products due to its labor costs, storage costs and transportation costs are higher, generally higher than domestic products. In addition, for delivery timeliness and after-sales service considerations, most domestic users will still choose high-quality domestic products, especially in terms of product specifications, appearance and color, domestic products have greater flexibility. Therefore, the real competitor is not the foreign company, but the domestic joint venture production enterprises.
Competition with domestic joint venture manufacturers is mainly determined by the product structure and performance, enterprise scale and raw material composition and other factors, in the past two years, packaging cardboard manufacturers continue to expand the scale of product quality grade and production capacity to improve rapidly, most of the new production capacity are now aimed at low-quantity, high-strength kraft boxboard, whose quantities are generally 125-300 grams / square meter, can replace imported products. Domestic enterprises as well as foreign-funded manufacturers of products on the market, in addition to offsetting the corresponding growth in demand and reduce imports, will inevitably be fierce competition in the domestic market.
The company is located in China's largest and most growth potential of the paper and paperboard consumer market, for the company's development plays a positive role in promoting. But also attracted domestic and foreign manufacturers have entered the region, according to the China Paper Association predicted that during the next two years, the Yangtze River Delta region's boxboard production capacity will increase by about 1.15 million tons. The main ones are Nine Dragons Paper's 450,000-ton kraftliner boxboard technological transformation project, Wuxi Rongcheng's 400,000-ton project, and Jingxing Paper's 300,000-ton project.
5, the fund-raising project to issue 80 million shares of public stock, the proceeds are mainly used for:
1, included in the National Economic and Trade Commission of the third batch of national key technological transformation of double-high and one-excellent project plan oriented to 300,000 tons of recycled environmental protection and green packaging paper project; 2, the transfer of the paper company's 30.40% of the equity and paper companies to increase capital.
As of June 30, 2006, the company has used the bank loan 18.264.76 million yuan first invested in 300,000 tons of renewable environmental protection green packaging paper project, the use of bank loans first paid the acquisition of 30.40% of the equity of the paper company 4.4 million yuan and capital increase of 2.5 million yuan. As of the date of this prospectus, the Company has 99.36% equity interest in the Paper Company.
300,000 tons of recycled environmentally friendly green packaging paper project is the production of high-grade kraft containerboard, the project is expected to be put into production in July 2007, 2008 production. After production is expected to annual operating income of 836.92 million yuan, net profit of 686.69 million yuan, investment margin of 18.15%, internal rate of return of 15.85%, payback period of 7.59 years (including the construction period of 2 years).
6, the company's profit forecast and sensitivity analysis 6.1 profit forecast 6.1.1 the company's product output forecast in recent years in view of the company's rising product prices and kraftliner paper larger market space, we believe that with the fund-raising project production, the company's performance with the growth of production capacity will be a rapid increase.
2006-2008 average annual compound growth of 47.1% in revenue, net profit average annual compound growth of 51.8% with the company's new and original equipment tapping the potential of 2006-2009 product output is expected to be as follows: