The company is considered as a domestic bellwether of paper making & packaging industry. In 2008, it realized business turnover of Rmb3311mn (+4.52% yoy), net profit attributable to parent of Rmb254mn (+28.23% yoy). The company’s dividend distribution plan was to send pretax dividend cash of Rmb0.80 for every ten shares.
Downstream demand gradually recovers.
The company’s development maintains steady and new project is considered explicit profit growth point in the near future.
Potential risks: Market demand recovers to some extent compared with status of 2008 yearend; however, it is still hard for the company to return to the previous prosperity within short term. Since domestic economic crisis has not come to an end, uncertainty still exists in macro-economy, thus investors are suggested focusing on investment risks.
Earning forecast and rating: We predict its 2009-2010E EPS at Rmb0.60 and Rmb0.83, representing dynamic P/E ratio at 14x and 10x based on closing price of Rmb8.21 on April 14, 2009. Its valuation owns obvious advantage compared with 23x of the sector average, thus rating is upgraded to “Buy”.