On the evening of March 25, Zhejiang Rongsheng Environmental Paper Industry Co., Ltd. released its annual report for 2024. The report showed that by the end of the fiscal year 2024, the company's total assets amounted to 4.706 billion yuan, with shareholders' equity totaling 2.329 billion yuan, and a debt-to-assets ratio of 50.52%. In 2024, the company achieved operating revenue of 2.235 billion yuan, a decrease of 2.45% compared to the previous year; it realized a net profit attributable to shareholders of listed companies of 286 million yuan, an increase of 5.79%; the net profit attributable to shareholders of listed companies after deducting non-recurring gains and losses was 236 million yuan, a decrease of 11.42% compared to the previous year.

The main reason is that in 2024, the decline in the sales price of raw paper led to a year-on-year decrease in the company's operating revenue. The decrease in the procurement prices of raw materials such as waste paper and raw coal was greater than the decrease in the product sales price, resulting in an increase in gross profit margin and net profit. Although the gains from wealth management products increased and the interest income from bank deposits decreased, this led to a year-on-year decrease in net profit attributable to shareholders of the listed company after excluding non-recurring gains and losses.

It should be noted that the decline in the sales price of raw paper directly led to a decrease in revenue, reflecting intense market competition and potential downward pressure on the industry. If the price of raw paper continues to fall in the future, it will pose challenges to the company's revenue and profitability. From the perspective of the past five years of operation, although the operating revenue was not the highest, the net profit still reached a new high over the past five years. However, it is worth pointing out that the growth in net profit largely relied on non-recurring gains, which are not sustainable growth points for the company's main business. Once investment income fluctuates or decreases, the company's overall profitability may be significantly affected.

In terms of product categories, the paper business, including corrugated original paper, kraft linerboard, and high-density paperboard, remains the primary source of revenue, with total revenue reaching 1.795 billion yuan and a gross profit margin of 13.45%. In 2024, the total output of the original paper was 798,300 tons, with sales totaling 800,100 tons, representing a year-on-year growth of 0.91%. The average price of the original paper was 2,243.67 yuan per ton. By comparison, in 2024, the total output of white cardboard paper by Guanhao Hi-New was 690,369 tons, with sales totaling 632,830 tons, at an average sales price of approximately 6,066 yuan per ton, nearly three times that of the former. The significant disparity in both product prices and profitability reflects that the company still has room for improvement in its product structure and market positioning.

The revenue from corrugated cardboard is 339 million yuan, with a gross profit margin of 10.34%. In 2024, the production of corrugated cardboard is expected to be 199 million square meters, with sales reaching 191 million square meters, a year-on-year increase of 11.63%. The average price per square meter of corrugated cardboard is 1.71 yuan.

The majority of revenue comes from Jiaxing Rongsheng Packaging Materials Co., Ltd., which has a revenue of 298 million yuan and a net loss of 3.5973 million yuan. The second source is Anhui Rongsheng New Materials Technology Co., Ltd., with a revenue of 85.06 million yuan, also in a loss situation, with losses reaching 12.9564 million yuan. The poor profitability of these two companies severely drags down the overall profitability of the company. This may be related to factors such as intense market competition, ineffective cost control, or low operational efficiency, which need to be taken seriously by the company and effective measures should be implemented to reverse the situation.

The steam business generated revenue of 84.28 million yuan, with a gross profit margin as high as 52.61%. It is a strong profit-generating segment for the company, possibly due to the circular economy model such as waste heat recovery, aligning with environmental policy guidance. However, its revenue scale is relatively small.

In addition, the annual report shows that the sales to the top five customers amounted to 322,194,300 yuan, accounting for 14.41% of the total annual sales; the purchases from the top five suppliers totaled 1,118,275,800 yuan, accounting for 58.83% of the total annual purchases.

In terms of the 2025 business plan, Rongsheng Environmental Protection has proposed the "1+2+3+N" strategy, with "Year of Innovation Implementation" as the theme, focusing on three dimensions: market, production, and management, reflecting the company's clear planning and positive attitude towards future development.

First, optimize the industrial layout to solidify the foundation for development. Initiatives such as the construction of the headquarters building, upgrading the paper production base, renovating combined heat and power facilities, constructing projects funded by raised capital, and implementing intelligent upgrades aim to enhance the company's R&D capabilities, product competitiveness, operational efficiency, and sustainable development capacity.

Secondly, we will promote digital and intelligent transformation along with green upgrading. Through technological innovation, cooperation among industry, academia, and research, optimizing production processes, building industrial internet platforms, and deepening big data applications, the company is committed to achieving high-end, intelligent, and green transformation to enhance resource utilization efficiency and decision-making levels.

Finally, the company particularly emphasizes the dual-wheel drive of party building and talent development, indicating that the company attaches great importance to the leading role of party building and the construction of the talent team, which is crucial for the long-term stable development of the enterprise.

Clearly, Rongsheng Environmental Protection has a clear vision for its future development direction and strategic priorities, particularly in areas such as green environmental protection and intelligent transformation, where it has shown positive momentum. The challenge lies in effectively implementing various strategic measures to address the losses in its corrugated box and paperboard businesses, enhance the profitability of its original paper business, and tackle external risks such as market competition and fluctuations in raw material prices. These will be key issues that the company needs to focus on and resolve from 2025 onwards.

Overall, Zhejiang Rongsheng Environmental Protection achieved profit growth in 2024 through effective cost control and non-recurring gains, but the decline in revenue and the losses in the paper box and paperboard business cast a shadow over the company's future development. The company's proposed 2025 business plan outlines clear strategic directions, demonstrating a willingness to change positively. However, facing a complex market environment and challenges in its own business structure, whether Rongsheng Environmental Protection can truly achieve the goal of "steady progress and quality improvement" hinges on the effective implementation of its strategy and successful turnaround of its loss-making businesses.