Light industry growth slowed in the first three quarters of 2018
A-share light industry segment (Shenwan classification) 124 enterprises in the first three quarters of 2018 achieved a total revenue of 353.6 billion yuan, a year-on-year increase of 17%, achieving a net profit of 26.2 billion yuan, a year-on-year increase of 5%, income and profit growth rate Compared with the first half of the year, the overall performance was slightly lower than our expectation. We recommend that the home select stocks, the paper sector has long been optimistic about the leading edge, packaging is optimistic about the fundamental margin to improve the market.
Home: Increased operating pressure and stable profitability
Under the downward trend of real estate boom this year, the operating pressure of home furnishing enterprises has gradually emerged. In the first three quarters, the household sector achieved a total revenue of 66.1 billion yuan, a year-on-year increase of 17%; the net profit of the mother returned to 6.2 billion yuan, an increase of 6%. The 18Q1/Q2/Q3 revenues of the 13 representative household enterprises selected were 35%/24%/22%, respectively, and the net profit growth rate of returning to the mothers was 26%/25%/16%. In the third quarter, benefiting from factors such as raw material price correction, Q3 single-quarter gross profit margin increased by 0.8pct to 39.7%. Cash flow slightly weakened. In the first three quarters, the average net operating cash flow of representative household enterprises accounted for 7.74pct to 4.9% of the average revenue. From the perspective of institutional positions, the market is worried about the real estate industry chain. In the third quarter, the public light fund positions of the household light industry sector fell by 0.12pct to 0.78%, and the industry over-provision ratio fell to 0.14%.
Papermaking: demand in the peak season fell short of expectations, Q3 performance declined slightly
In the first three quarters of 2018, the papermaking sector achieved revenue of 107.9 billion yuan, a year-on-year increase of 17%; and realized a net profit of 10 billion yuan, a year-on-year increase of 14%. In the third quarter, demand in the peak season fell short of expectations. The price of finished papers rebounded. At the same time, raw material prices fluctuated at a high level. The revenue growth rate of Q3 single-quarter sector fell back to 7%, and the growth rate of net profit of mothers fell to -0.2%. In the first three quarters, the net cash inflow from operations increased significantly year-on-year, and the net cash outflow from investment increased by 44% year-on-year. In terms of institutional positions, the proportion of public fund holdings in the third quarter decreased by 0.08pct to 0.22%, of which Sun Paper, Zhongshun Jierou and other institutions were highly concerned.
Packaging: raw material price correction, earnings are expected to stabilize
In the first three quarters of 2018, packaging and printing enterprises realized revenues of 67.5 billion yuan, a year-on-year increase of 14%; net profit of 5.8 billion yuan, a year-on-year increase of 14%. In the third quarter, benefiting from the price correction of finished paper, the gross profit margin of Q3 in the packaging sector increased by 1.7pct to 24.4%. At present, the negative factors such as rising raw material prices and increased exchange losses have gradually improved. In the long run, multiple factors such as horizontal mergers and acquisitions and downstream customers will promote industry consolidation. Leading companies are expected to take this opportunity to further expand their scale. Improve market share.
Investment suggestion: Home-selected stocks, papermaking sector long-term optimistic leader
In terms of home, the home sector PE (TTM) has been adjusted from the 35x at the beginning of the year to 18x, implying the market's pessimistic expectations for the downturn in the real estate boom cycle. At the current time, we recommend selecting stocks, focusing on the relevant targets that are still supported by the expansion of the category and the growth of the channel model. The key recommendation is to recommend Gujiajiao and Shangpin. It is recommended to pay attention to the European home. In terms of papermaking, considering the increase in new production capacity and weak downstream demand during the year, we expect the profitability of the sector to decline. We will be optimistic about the future of solar paper, packaging paper leading Shanying Paper and the channels for continuous optimization. Paper companies are smooth and soft. The packaging sector is recommended to operate the marginal improvement of Yutong Technology, and it is recommended to focus on the Jinjia shares of the e-cigarette theme.
Risk warning: environmental protection execution was less than expected; real estate sales were lower than expected.
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