Xianhe Co., Ltd. (603733) In-depth Research Report: Production Capacity Continues to Expand Specialty Paper Leads Multi-category & High Quality & Scale Advantages

Xianhe Co., Ltd. is a large-scale domestic specialty paper company, including the joint venture company. Its products cover more than 60 varieties of nine series, and it has the production capacity of the entire industrial chain of chemical, pulp, energy, base paper and paper products.The company and its joint ventures have a total of 40 paper machine production lines with an annual production capacity of over 80 tons. The industry scale and industry depth are relatively complete. It is currently one of the largest domestic specialty paper production enterprises.

The operating income of Xianhe shares has been increasing year by year, and it has gradually maintained 深圳spa会所 a high level since 2016.

In 2013-2018, the company’s operating income composite material was 20.

52%, with revenue of 40 in 2018.

98 ppm, +34 for ten years.


  The prosperity of the special paper industry has increased year by year in the proportion of paper and paperboard production in the country, from 1 in 2009.

74% increased to 3 in 2018.


In 2018, the production of special paper and paperboard was 320 tons, +4 per year.

92%; 261 budget for consumption, +4 per year.


The composite intensity of production volume from 2009 to 2018 8.

78%, compound intensity of consumption 6.


1) The total CAGR of decorative base paper sales during the past five years is 11.

40%, showing steady growth.

Mainly benefited from the rapid development of downstream real estate, building decoration industry 深圳桑拿网 and wood-based panel industry.

2) Tourism and film industry are improving, benefiting from thermal paper.

The CAGR of thermal paper from 2006 to 2015 was 25.

55%, huge development potential.

The steady increase in passenger turnover has brought about increasing demand for related thermal paper such as boarding passes, high-speed rail tickets, and luggage tags.

The explosive growth of movie box office revenue has further driven the demand for thermal paper and other thermal paper.

3) The express way industry’s electronic waybills generally urge the rapid development of the field of thermal paper and label release paper.

The absolute express business volume showed a “J-shaped” rapid growth, with a CAGR of 42 in 2008-2018.

08%, the demand for logistics labels is expected to reach 10 in 2021.

  Large-scale production, multi-variety strategy, and high-quality products lead the special paper industry with the joint venture Xiawang Paper.

1) The level of the Xianhe stock market is significant, with market shares in multiple sub-sectors leading, and it has a breakthrough bargaining power.

It has a wide range of products, outstanding tissue paper manufacturing capabilities, diversified risks, and stabilized gross profit.

2) Self-provided upstream wood pulp production capacity, buffering the risk of rising pulp prices.

Subsidiary Henan Xianhe owns 5.

1The initial pulp production capacity can save 80% of Henan Xianhe’s wood pulp demand, and the cost advantage is prominent.

3) Quality helps Xiawang Paper dominate the market, with a steady increase in gross profit margin, providing stable investment returns.

The total revenue of the company and Xiawang Paper’s household decorative paper products accounted for 37% -45% of the total revenue, which is an important source of company revenue.

Xiawang Paper has a market share of 24% in the decorative base paper industry, ranking second in the industry, and has outstanding profit performance in the first-ranked Qifeng New Materials.

  The main benefits are: through the advanced equipment, technology, and management of another shareholder, Germany Schatter; in the supply of titanium dioxide and other raw material supply channels, it has a good ability to control and respond to the impact of rising raw material prices.

  Special paper leading companies continued to expand production capacity, and for the first time, they were assigned a “recommended” rating.

In December 2019, the company announced that it plans to issue convertible bonds at the end of 201912.500 million.

In addition to the raised funds, 900 million yuan will be used for the production of 22 high-grade cardboard-based new materials projects.

After the completion, the capacity of the existing glassine paper, sublimation transfer base paper is expected to triple, and the capacity of liquid packaging paper and baking paper is nearly 10 times.

  And benefit from the stable development of express delivery, medical food, sanitary products and other fields. The newly-produced products such as glassine paper have a broad future market development space, and the company’s influence in the specialty paper market continues to expand.

We estimate that the company’s net profit attributable to its parent for 2019-2021 will be 4.

03, 4.


US $ 3.3 billion, corresponding to PE, 22, 19, and 16 times, respectively, given a “recommended” rating; based on the company’s historical forecast and valuation of bitcoin paper listed companies, 21 times PE in 2020, corresponding to a target price of 16 yuan.

  Risk warning: Wood pulp prices fluctuate, new capacity construction falls short of expectations, macroeconomic fluctuations, household industry, tobacco industry is less than expected, and major changes in the competitive landscape.