Greatview Aseptic Packaging (468 HK) Summary
Core Content
Greatview Aseptic Packaging is a leading aseptic carton manufacturer in China, with a market share of approximately 15% as of 2019. The company has operations in China and Germany, serving major customers in the dairy and non-carbonated soft drinks industries. The document provides a comprehensive review of the company's 2020 performance and future outlook, including financial highlights, key assumptions, and investment recommendations.
2020 Performance Highlights
- Net Profit Growth: Net profit grew by 26% YoY when excluding non-core losses, despite a slight decline in average selling price (ASP) and a hedging loss of CNY27m.
- Revenue Growth: Revenue increased by 12% YoY in 2020, driven by a 14% rise in sales volume.
- Utilisation Rate: The company's utilisation rate was 59% in 2020, up from 50.7% in 2019.
- Dividend Payout: A final DPS of HKD0.14 was declared, with a payout ratio of 90%, slightly lower than 96% in 2019.
- Operating Margin: Operating margin in 2020 came in slightly below estimates due to higher operating expenses, despite an improved gross margin.
Key Financial Metrics
| Metric |
2020 |
2019 |
YoY% |
Our Estimates |
Var. (%) |
| Revenue (CNYm) |
3,039 |
2,707 |
12% |
3,121 |
-3% |
| Gross Profit (CNYm) |
806 |
668 |
21% |
818 |
-2% |
| Operating Profit (CNYm) |
461 |
440 |
5% |
489 |
-6% |
| Net Profit (CNYm) |
343 |
337 |
2% |
375 |
-9% |
| Core EPS (CNY) |
0.256 |
0.252 |
1% |
0.280 |
-9% |
| DPS (CNY) |
0.231 |
0.243 |
-5% |
0.253 |
-9% |
| Gross Margin (%) |
26.5 |
24.7 |
+1.8ppt |
26.2 |
+0.3ppt |
| Operating Margin (%) |
15.2 |
16.2 |
-1.1ppt |
15.7 |
-0.5ppt |
| Net Margin (%) |
11.3 |
12.5 |
-1.2ppt |
12.0 |
-0.8ppt |
| ROE (%) |
15.3 |
17.6 |
19.9 |
15.3 |
17.6 |
Key Assumptions for Future Growth
| Metric |
2021E |
2022E |
2023E |
| Sales Volume Growth YoY (%) |
15% |
15% |
13% |
| ASP (CNY/meal) |
0.176 |
0.176 |
0.176 |
| Overseas Revenue YoY (%) |
25.0 |
25.0 |
25.0 |
| Gross Margin (%) |
26.5 |
24.5 |
24.3 |
| EBITDA Margin (%) |
21.1 |
19.4 |
19.0 |
| Operating Profit Margin (%) |
15.2 |
14.3 |
14.5 |
| Net Profit Margin (%) |
11.3 |
10.7 |
10.9 |
| ROE (%) |
15.3 |
17.6 |
19.9 |
Investment Recommendation
- Target Price: Trimmed from HKD5.00 to HKD4.82.
- Recommendation: Reiterating "Buy" based on strong dividend yield and improving utilisation rate.
- Risks: High customer concentration (top 2: ~49% in 2020) and price competition.
Revenue Breakdown by Region (CNYm)
| Region |
2020 |
2019 |
YoY% |
| China |
2,115 |
1,915 |
10% |
| International |
924 |
792 |
18% |
| Total Revenue |
3,039 |
2,707 |
12% |
Share Price Performance
- Share Price (30 Mar): HKD4.03
- Up/Downside: +19.6%
- 12-month range: 2.35-4.63
- Market Cap (USDbn): 0.69
- 3m Avg Daily Turnover (USDm): 0.57
- Shares Outstanding (m): 1,337
- Major Shareholder: Jardine Strategic (28.2%)
Financial Summary (CNYm)
| Metric |
2021E |
2022E |
2023E |
| Revenue (m) |
4,103 |
4,633 |
n.a. |
| Operating Profit (m) |
594 |
684 |
n.a. |
| Net Profit (m) |
446 |
513 |
n.a. |
| Core EPS (FD) |
0.333 |
0.384 |
n.a. |
| DPS |
0.300 |
0.346 |
n.a. |
| PER (x) |
10.2 |
8.9 |
n.a. |
| Dividend Yield (%) |
8.8 |
10.2 |
n.a. |
| PBR (x) |
1.8 |
1.7 |
n.a. |
| EV/EBITDA (x) |
5.0 |
4.6 |
n.a. |
| ROE (%) |
17.6 |
19.9 |
n.a. |
Forecast Revisions (%)
| Metric |
2021E |
2022E |
| Revenue Change |
-0.5 |
-0.6 |
| Net Profit Change |
-6.9 |
-6.1 |
| Core EPS (FD) Change |
-6.6 |
-5.7 |
Key Takeaways from Analyst Call
- Management expects to maintain steady dividends unless there are significant capital expenditures.
- Capex is unlikely to increase substantially in the next 1-2 years due to current low utilisation rate and potential for small-scale capacity increases.
- Unit costs for raw materials are expected to rise in 2021, with management unlikely to pass on the cost pressure to customers in China.
- Improving utilisation rate and operating leverage are expected to partially offset the cost pressure in 2021.
- Gross margin is projected to normalise to 24-25% over 2021-23 after reaching 26.5% in 2020.
ESG and Strategic Positioning
- Greatview is believed to have investment value from an ESG perspective.
- The company is well-positioned to capture the rising use of cartons in beverage packaging globally.
- It is diversifying its revenue sources outside of China, contributing to its strategic value.
Key Risks
- High customer concentration (top 2: ~49% in 2020)
- Price competition
Disclosure and Conflict of Interest
- The report is produced by Daiwa Securities Group Inc. and its affiliates.
- There may be conflicts of interest due to Daiwa's investment banking and market-making activities.
- Investors are advised to refer to the BlueMatrix disclosure link for detailed information on ownership and investment banking relationships.
