CSCI-Stock Connect-C&S Paper (002511 CH)：A broad comparison of China’s Big Four tissue paper companies - 20171211
A broad comparison of China’s Big Four tissue paper companies
This report aims to provide a comparison of China’s Big Four tissue paper producers (C&S Paper, Hengan, Vinda and GHY Paper) from different perspectives.
Product. C&S Paper is actively pushing into the high-end market while growing high margin non-toilet paper sales. Hengan is a leader in both tissue paper and sanitary products. Vinda is transitioning away from a pure play towards an 11-brand portfolio spanning adult/feminine/baby care. GHY Paper mainly produces tissue paper, kitchen towel and wet paper towel occupying all price ranges.
Capacity. C&S Paper/Hengan/Vinda/GHY Paper had production capacity of approximately 505,000/1.14mn/1.04mn/1.32mn tons in 2016.
Sales. C&S Paper devotes extra efforts to GT/KA/AFH/EC channel development, stepping up its exposure in counties and towns through direct sales and dealership. Hengan’s 300 plus sales offices work seamlessly with more than 3,000 dealers nationwide. Vinda looks to e-commerce as an important growth engine, which accounted for up to 18% of its 2016 sales revenue. GHY Paper counts on the strong back-up of its parent APP for a well-established sales network extending to 160 countries and regions worldwide.
Headline performance. C&S Paper, Hengan, Vinda and GHY Paper respectively posted RMB3.809bn/RMB19.306bn/RMB10.79bn/RMB9.786bn in operating revenue in 2016, with C&S Paper growing fastest in 1H17. Hengan delivered the highest gross margin of 48.64% in the first half among the Big Four, followed by C&S Paper (36.16%).
Earnings forecast. We estimate C&S Paper to have an operating revenue of RMB4.689bn/5.723bn for 2017/2018, up 23.11%/22.05% YoY, corresponding to a net profit of RMB353mn/465mn, up 35.8%/31.7% YoY, EPS of RMB0.47/0.61, and 32x/25x PER. The company now has a valuation of RMB11.3bn. Maintain Buy.
Risk factors: pulp price spikes; intense competition
C&S Paper Co.,Ltd is a China-based company principally engaged in the production, processing and sales of household paper products. The Company's main products include roll paper and non-roll paper tissue products. The Company owns brand names of C&S and Sun. The Company distributes its products in the domestic market.
中信建投国际研究部是中信建投证券香港子公司中信建投国际下属研究部门，负责香港上市公司、行业和宏观研究。我们的研究产品和服务包括行业报告、公司、宏观、常规日报、新闻摘要、分析员路演、上市公司非交易路演和反向路演 以及策略会。
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