Superior regional location, strong profitability, investment value analysis report, investment points:

With the rapid development of the industry, high-grade products are in short supply: the development of paper industry at home and abroad is basically synchronized with GDP. China's paper industry has maintained rapid development for 20 years, but there is still a big gap between supply and demand to be filled by imports.

Jing xing Paper's leading product, cardboard, is the most demanding product in the industry. Although the output growth rate of boxboard paper is higher than that of the whole paper industry in recent years, the import volume is still maintained at about 6.5438+100,000 tons/year, and the gap of high-grade products is even greater.

The competitiveness of domestic paper industry has been rapidly improved, and the dependence on international wood pulp has been greatly reduced: due to the commissioning of a large number of new production lines, the self-sufficiency rate of raw materials has been continuously improved, and the competitiveness of products has been increasing day by day. In 2005, the output of paper and paperboard increased by 13. 13%, while that of imported wood pulp only increased by 3.69%. Imported paper was 5.24 million tons, down14.7% year on year; The export of paper and paperboard was 6.5438+0.939 million tons, a year-on-year increase of 55.4%.

The company has unique advantages: the company's operating mechanism is flexible and efficient, the regional location is superior, the product sales price and gross profit level are relatively stable or even improved, the environmental protection outsourcing is low, and the fund-raising projects have broad prospects. But be alert to the risk of overcapacity.

In the next two years, the company's performance will increase substantially: with the fund-raising project put into production in July 2007, the company's main business income will grow at a compound annual rate of 47. 1% in 2007 and 2008, its net profit will grow at an average annual rate of 5 1.8%, its earnings per share will be 0.36 yuan in 2007 and 0.59 yuan in 2008.

Valuation scope: We mainly average the P/E ratio, P/B ratio, EV/EBITDA and DCF valuation results of domestic A-share representative companies. Considering the positive demonstration role of the Hong Kong market, the range is determined to be 3.60-7.00 yuan, the benchmark value is 5.30 yuan, and the PE value based on fully diluted earnings per share in 2005 is 265,438+.

Inquiry range: We take the benchmark price of 5.30 yuan per share as the center, fully consider the market performance of the paper sector and the recent enthusiasm for subscription of small and medium-sized board new shares, and determine the inquiry range of 3.86-4.63 yuan. Based on the fully diluted earnings per share of 0.25 yuan in 2005, the price-earnings ratio of the issue is 15.44- 18.52 times.

Suggestions for operation after listing: We expect that the average price of Jingxing Paper should be around 6 yuan on the first day, even if the upper limit of inquiry is 4.63 yuan, the increase will be around 30%. If it reaches more than 6.50 yuan, you can consider selling it. If it is close to the benchmark value of 5.30 yuan, you can consider intervening according to market conditions.

1, Company Profile jing xing Paper is located in Jiaxing City, Zhejiang Province. Its predecessor is Zhejiang jing xing Paper Group Co., Ltd., and its predecessor is pinghu city No.2 Paper Mill, which was established in July 1984. After that, the internal equity relationship of the company was transferred several times until Zhejiang Jingxing Paper Group Co., Ltd. was changed to Zhejiang Jingxing in September 20001year.

Before this issuance, the company had 6 shareholders, namely Mr. Zhu Zailong, Shanghai Mo Zhihua Co., Ltd., Japan Pulp Co., Ltd., pinghu city Caoqiao Township Collective Asset Management Company and pinghu city Electric Power Industry Company. Although Mr. Zhu Zailong's shareholding ratio is the same as that of Mo Zhihua, Mr. Zhu Zailong is the chairman of the company and the actual controller of Jingxing Paper Co., Ltd. because Japan Paper Co., Ltd. and Japan Pulp Trading Co., Ltd. entrust Zhu Zailong with full power to exercise shareholder rights.

The business scope of the company is the production and sale of wrapping paper. The main products are kraft liner board, high-strength corrugated base paper, white paperboard and cartons. As of June 65438+February 3, 2005, the company had 445 registered employees, with an annual production capacity of 320,000 tons, total assets of 65.438+0.9 billion yuan, main business income of 950 million yuan, net profit of 56.64 million yuan, total share capital of 65.438+0.50 million shares before issuance, and earnings per share of 0.38 yuan. The six shareholders of the company's promoter shares all promised not to reduce their shares of the company before this issuance within 36 months after listing.

The company is a leading packaging enterprise in China recognized by China Packaging Federation. Its sales revenue and output rank 20th in China, and it has a production capacity of 220,000 tons of high-grade kraft liner board, ranking fourth among similar domestic manufacturers. At present, the company, together with nine dragons paper and Liwen Paper Co., Ltd., is the publisher of guiding price information designated by China Pulp and Paper Business Network, and has a certain market dominance in product pricing. Jingxing brand kraft liner board was awarded the title of China famous brand product by China Brand Development Promotion Committee. The joint-stock company was awarded the title of Zhejiang Integrity Demonstration Enterprise by the Zhejiang Provincial People's Government; It was recognized by Zhejiang Environmental Protection Bureau as the first batch of four-star environmental credit enterprises in Zhejiang Province; It was rated as an excellent and trustworthy enterprise in Jiaxing by Jiaxing Branch of China People's Bank; It was recognized as AAA credit enterprise by Zhejiang Branch of Agricultural Bank of China and awarded the title of best credit customer. The joint-stock company has passed ISO9002 quality management system and ISO 1400 1 environmental management system certification.

2. Industry development background: The competitiveness of China paper industry has improved by 2. 1. There is huge room for industry development. After decades of construction and development, China paper industry has made great achievements. By the end of 2005, there were about 3,200 production enterprises in China. During the period from 19 1 to 14 in 2005, the total output and consumption of paper and paperboard in China were 9. Although its growth rate is higher than that of GDP, it still cannot meet the needs of national economic development, and a large number of high-grade and high-quality paper needs to be imported every year to meet the needs of packaging, printing, office and other paper. Although the supply and demand pressure of some varieties has gradually increased since 2005, it is still a structural contradiction and the total amount is still relatively loose. We expect this situation to last until about 20 10.

2.2 The demand for cardboard grows faster than the industry average, and the domestic consumption growth of cardboard has a strong positive correlation with GDP, just like the whole paper industry.

It is predicted that during the 11th Five-Year Plan period, China's economy will continue to maintain rapid and stable development. During the period of 200620 10, the average annual growth rate of GDP will remain at 7. 58.5%, the consumption of cardboard in 2005 will be around11million tons. It is conservatively predicted that the average annual consumption increment of the paperboard industry will remain at 82- 100.

From 200 1-2005, the output of China's box-board paper increased by 1 13%, with a compound annual growth rate of 20.8%, consumption increased by 102% and a compound annual growth rate of 19.2%. The growth of production and consumption has greatly exceeded the growth of GDP, and it is also faster than the growth of papermaking. In 2005, the domestic cardboard imports were still 6.5438+0.36 million tons, accounting for 26% of the total domestic imports and 654.38+02.4% of the cardboard consumption.

3. Analysis of the company's operation and financial situation 3. 1 The annual output growth of the company and the profitability of its subsidiaries. At the beginning of 2002, Jingxing Paper's packaging paperboard production capacity was over 654.38 million tons. In June, 2002, the production line with an annual output of180,000 tons was put into operation, with a production capacity of 220,000 tons. In July 2002, Nanjing Jingxing 5 1% equity was acquired, and Pinghu Jingxing 1 new carton production line was put into production at the end of 2002. At present, the company has a production capacity of 220,000 tons of kraft liner, 40,000 tons of high-strength corrugated paper, 50,000 tons of white cowhide cards and 80 million square meters of cartons. In July 2007, 300,000 tons of recycled paper and environmental protection paper were put into production, and the company's production capacity reached 620,000 tons.

The company's main business is very prominent, with paper products accounting for 99. 1% and other business income accounting for only 0.9%.

At present, the company's main business comes from three holding subsidiaries. The main products of the holding subsidiaries Pinghu jing xing and Nanjing jing xing are cartons, accounting for about 65,438+07% of the net profit; The main products of paper companies are kraft liner and corrugated paper, accounting for more than 60% of net profit; White pickup truck is directly operated by the joint-stock company, accounting for about 20% of the net profit.

3.2 Income of main business of the company in the past three years The company's sales income in the past three years was 740 million yuan, 850 million yuan and 950 million yuan respectively, with a compound annual growth rate of 65,438+03.3%. The main reason is that the company has no big projects put into production.

3.3 Net profit and growth of the company in the past three years The company's net profit in the past three years was 42.55 million yuan, 47.59 million yuan and 56.64 million yuan respectively, with a compound annual growth rate of 65.438+05.5%.

3.4 In 2004, the sales volume, selling price and production and sales rate of the company's main products were all above 97%, and the market situation was good.

3.5 The average price trend of the company's main products in the past three years has been enhanced with the rapid development of the domestic paper industry. In the fierce competition, the sales price of the company's main products has not decreased, but has increased. On the one hand, it shows that the market space of the kraft liner board industry is huge, on the other hand, it also shows that the company has a high management level and a unique vision in project selection. Avoid fierce competition among many products in the industry.

3.6 Composition and price trend of main raw materials The raw materials needed for the company's production are mainly waste paper and wood pulp, accounting for about 93% and 7% by weight respectively; By volume, waste paper accounts for about 79%, and wood pulp accounts for about 21%; The supply and price of raw materials are influenced by climate, international political situation and the relationship between supply and demand in the international market.

In 2005, joint-stock companies and paper companies accounted for 50.50% of the total waste paper purchases, and imported wood pulp accounted for 56.65% of the total wood pulp purchases. From June to June, 2006, joint-stock companies and paper companies accounted for about 665,438+0% of the total waste paper purchases, and imported wood pulp accounted for about 37% of the total wood pulp purchases. Domestic waste paper is mainly purchased from local renewable resources enterprises. Our company has the right to import and export. We import waste paper from Japan, America and Europe by ourselves or through other import and export companies. Domestic wood pulp is mainly provided by Qingzhou Paper, Fujian Nanzhi and other wood pulp manufacturers, and imported wood pulp is mainly imported from Russia.

The electricity used by the company for production comes from East China Power Grid, and the electricity fee is paid to pinghu city Electric Power Operation Department according to the actual electricity consumption. Since the second half of 2003, there has been a general shortage of power supply in East China. Although it has not had a great impact on the company's production and operation so far, if the contradiction between economic growth and power supply is further prominent, it may have an adverse impact on the company's production and operation. Our company is located in Zhejiang Province. With the overall economic growth of Zhejiang Province, in order to meet the growing demand for electricity in this region, in 2003, Zhejiang Province formulated the power supply construction goals of "three guarantees and two struggles": first, to ensure 6,543.8+million kilowatts, and strive for 6,543.8+0.2 million kilowatts installed and put into operation, that is, to put into operation 654.38+065.438+0 projects; The second is to ensure that100000 kilowatts, and strive to start construction of power supply projects above120000 kilowatts, that is, start eight projects; The third is to ensure that the preparatory project of 654.38+million kilowatts carries out the preliminary work. Once the above objectives are completed as scheduled, the installed power capacity of Zhejiang Province will reach about 45.62 million kilowatts, and the per capita installed capacity will be close to 1 kilowatt. The commissioning of these projects will greatly improve the power supply capacity, thus providing a strong guarantee for the company to raise funds to invest in the power demand after the completion of the projects.

The steam produced by the company comes from Pinghu Thermal Power Plant. At present, the annual steam production capacity of this plant is 6.5438+0.38 million tons, and the actual annual output is about 740,000 tons. At present, the company's annual steam consumption is about 475,500 tons, and the annual new steam consumption is about 280,000 tons after the fund-raising investment project is put into production. Therefore, the steam supply capacity of Pinghu Thermal Power Plant can fully meet the steam production demand after the investment project with raised funds is put into production.

Waste paper and wood pulp account for the largest proportion in the cost composition of kraft liner board. From the composition of cost value, the ratio of waste paper to wood pulp is 3-4: 1, and the price of waste paper has a significant impact on the cost. The imported waste paper used by most domestic paper-making enterprises is imported from the United States, and because jing xing Paper introduced the technology of using Japanese waste paper to make paper from Japanese shareholders, it can use Japanese waste paper to make paper at a lower cost. In terms of price, American waste paper is about 10% higher than Japanese waste paper. The lower price of Japanese waste paper makes jing xing Paper have a relative cost advantage, which makes the gross profit margin of products in a leading position in the industry.

3.7 The company's comprehensive gross profit rate and gross profit rate of sub-products in the last three years and the first phase, the company's leading products continued to sell well and the cost control was effective, so the comprehensive gross profit rate remained at a high level above 65,438+09%. Among them, the gross profit margin of high-strength corrugated base paper has been significantly improved since 2005, mainly because the paper company completed the technical transformation project of 30 thousand tons of high-strength corrugated base paper in February 2005. In this project, the corrugated base paper is produced by using the pulp waste liquid produced by this enterprise, which greatly reduces the production cost and significantly improves the gross profit margin of this product.

We compare seven listed companies with strong profitability in the industry with jing xing Paper, and the basic conclusion is that the return on equity is almost the same. On the one hand, it shows that Jingxing Paper's capital utilization efficiency is high, and it also has a considerable relationship with the company's current high debt. The high expense level during the period is caused by the high financial expense ratio, which further affects the improvement of the net profit rate of sales. But it is worth noting that the company's gross profit level is high. With the availability of funds raised by the company and the decline of financial expenses, the profitability of the company will be enhanced.

3.8 Compared with the operating ability, the overall debt level of the company is higher than the industry average, and the current ratio and quick ratio are lower than the industry average. There are some risks in the short-term solvency, mainly because the company has developed rapidly in recent years, and the required funds mainly depend on bank loans besides its own accumulation. However, the company's operational capacity is much stronger than the industry average, and its capital efficiency is higher. At the same time, the cash flow generated by the company's operating activities is also much higher than the average level, which has played a certain role in alleviating the repayment pressure of short-term debts. If this financing is successful, the company's debt risk will be greatly reduced.

4. Company Competitiveness and Risk Analysis 4. 1 Company Competitiveness Analysis 4. 1 Company's Position in the Industry According to the comprehensive strength ranking of domestic-funded enterprises (including joint ventures and foreign-funded enterprises) of the National Paper Association in 2005, jing xing Paper ranked 17 and its sales revenue ranked 2 1. Judging from the subdivision varieties of kraft paper lining, it ranks fourth in China. It should be said that this ranking is not ideal, mainly because the company has not put into production any new production lines in the past year or two. After the fundraising project is put into production in 2007, the output will reach 500,000 tons in that year and close to 750,000 tons in 2008? The actual output of 300,000 tons of new paper machines raised is about 450,000 tons, and the ranking of the company's comprehensive strength will be greatly improved.

4. 1.2 The market demand for the company's leading products is huge. It is predicted that China's economy will maintain rapid and steady development during the Eleventh Five-Year Plan period, and the average annual growth rate of GDP will remain at 7.58.5% from 2006 to 20 10. Such rapid growth will inevitably strongly promote the substantial growth of transportation and packaging demand that supports consumption and exports. In 2005, the consumption of cardboard was about 1 1 10,000 tons. It is conservatively predicted that the annual consumption increment of the paperboard industry will remain at around 8200- 1 10,000 tons, which provides a large space for the development of enterprises.

Due to the rapid growth of domestic demand for kraft liner board and a large number of imports, a large amount of funds have been attracted to the production field of kraft liner board, especially high-grade kraft liner board. According to the statistics of China Paper Association, the new production capacity will reach about 2.25 million tons in the next two years. According to our previous demand forecast, the annual consumption increment of the kraft liner board industry will remain at around 820- 1 10,000 tons. In addition, about 1.35 million tons of imported products can be replaced every year. It can be said that the domestic supply of cardboard products is not excessive, and the possible result is that the imported products will be completely replaced by around 2065.438+00, and the domestic production and demand will reach a balance.

4. 1.3 The main products of jing xing Paper have strong profitability. The main product of jing xing Paper is A-grade kraft paper, of which 70% kraft paper has a basis weight of 150g- 175g/m2. Higher product grade and quality have advantages in replacing imported kraft paper lining and satisfying domestic high-end customers, so the sales price of its products is higher than that of similar domestic products.

4. 1.4 companies with smooth management mechanism and superior geographical location give full play to the advantages of flexible management mechanism of private enterprises and constantly carry out reform and innovation in enterprise management and personnel system. Engaged in the production and operation of packaging paperboard for many years, he has formed an effective jing xing management model in raw material procurement, cost control, inventory management, quality management, marketing management and performance management. For many years, Jingxing Paper, like most private enterprises, has been constrained by the shortage of funds. If this issue is successful, it can be predicted that with the commissioning of new projects, the comprehensive competitiveness of the company will be significantly improved.

The company is located in East China, which is one of the largest and most potential paper and paperboard consumption markets in China. The city in this area is dense (the company is located in the center of Shanghai, Hangzhou and Suzhou), with developed economy, prosperous business and high people's living standard. The demand for packaging cardboard has a solid economic foundation in East China. At the same time, due to the large consumption of paper in this area, the corresponding amount of waste paper is huge, which provides the company with a broad product market and raw material market. In addition, the company is located in Zhapu Port on the Hangzhou Bay, close to Shanghai and Jiangsu, with convenient land and water transportation. Compared with competitors, it has the advantage of lower transportation cost and is convenient for the expansion of product sales. Greatly saved the cost of raw materials and finished products entering and leaving the company.

4. 1.5 The raw materials needed for papermaking in jing xing Paper Industry are mainly waste paper and wood pulp. Compared with paper-making enterprises with non-wood fibers as the main raw materials, the company produces less wastewater, has less pollution and is easy to treat. Since the establishment of the factory, the company has attached great importance to environmental protection issues such as sewage treatment and achieved good results. Through the use of wastewater recovery facilities, wastewater discharge has been greatly reduced. On June 5438+ 10, 2002, the environmental management system established by the company met the ISO 1400 1 standard and obtained the certification certificate.

At the same time, paper packaging has the characteristics of low cost, light weight, easy storage, easy processing, self-degradable waste and easy recycling, and is recognized as a green packaging material. With the enhancement of consumers' awareness of environmental protection, paper packaging has become an ideal substitute for other packaging materials.

At present, all the wastewater discharged by the company is treated centrally through Jiaxing United Sewage Treatment Network, and it promises to provide Jingxing Paper with 6,543,800 tons of wastewater discharge increment in the future. Due to the scale advantage of the pipe network system, the sewage charges charged are lower than the daily operating costs of independent sewage treatment by ordinary companies in the industry. The lower investment in fixed assets and operating expenses enable jing xing Paper to maintain its cost advantage in environmental protection.

4.2 Company Risk We believe that the biggest risk of the company comes from the excessive release of industry capacity. Although there is no fierce competition of oversupply in the kraft liner board market recently, due to the centralized release of production capacity, the prices of many paper products have fallen seriously, indicating that this risk exists.

As far as high-grade packaging paperboard is concerned, the market share of imported products is limited, mainly because the quality gap between domestic and foreign high-grade packaging paperboard products is not large, and the prices of foreign products are generally higher than those of domestic products because of high labor costs, storage costs and transportation costs. In addition, for the sake of timely delivery and after-sales service, most domestic users will still choose high-quality domestic products, especially in terms of product specifications, appearance and color, which have greater flexibility. So the real competitors are not overseas companies, but domestic joint venture production enterprises.

The competition with domestic joint venture manufacturers is mainly determined by product structure and performance, enterprise scale, raw material composition and other factors. In the past two years, the scale of packaging paperboard production enterprises has been expanding, and the product quality and production capacity have been rapidly improved. At present, most of the new production capacity is aimed at low basis weight and high strength kraft liner board, and its basis weight is generally 125-300 g/m2, which can replace imported products. After the products of domestic enterprises and foreign-funded manufacturers are put on the market, in addition to offsetting the corresponding demand growth and reducing imports, it is bound to launch fierce competition in the domestic market.

The company is located in the largest and most potential paper and paperboard consumer market in China, which plays a positive role in promoting the company's development. But at the same time, it also attracted domestic and foreign manufacturers to settle in. According to the forecast of China Paper Industry Association, the cardboard production capacity in the Yangtze River Delta will increase by about 1. 1.5 million tons in the next two years. There are mainly 450,000-ton kraft liner paper technical transformation projects in nine dragons paper, 400,000-ton projects in Wuxi Rongcheng and 300,000-ton projects in Jingxing Paper.

5. Fund-raising project This time, it is planned to issue 80 million public shares, and the funds raised are mainly used for:

1, included in the 300,000-ton renewable environmental protection green packaging paper project guided by the third batch of national key technological transformation projects of the State Economic and Trade Commission; 2. Transfer 30.40% equity of the paper company to increase capital of the paper company.

By June 30, 2006, the company had used the bank loan 18? 2,647,600 yuan was invested in 300,000 tons of recycled environmental protection green packaging paper project in advance, and 4,000 yuan was used to acquire 30.40% equity of paper company by bank loan in advance. 4 million yuan to increase capital 2? 5 million yuan. As of the date of issuance of this prospectus, the joint-stock company has consolidated 99.36% of the shares of the paper company.

The 300,000-ton renewable environmental protection green wrapping paper project is to produce high-grade kraft liner. It is estimated that the project will be put into production in July 2007 and reach production in 2008. Estimated annual operating income after delivery is 83? 6.92 million yuan, net profit of 6? 8.69 million yuan, the investment profit rate is 65,438+08.15%, the internal rate of return is 65,438+05.85%, and the investment payback period is 7.59 years (including the construction period of 2 years).

6. Company's profit forecast and sensitivity analysis 6. 1 Profit forecast 6. 1 Company's product output forecast In view of the increase in product prices in recent years, there is a large market space for kraft liner board. We believe that with the production of raised funds, the company's performance will grow rapidly with the increase in production capacity.

From 2006 to 2008, the compound annual growth rate of main income was 47. 1%, and the compound annual growth rate of net profit was 5 1.8%.