MYS Group Obtains Packaging Supplier Qualification for JWEI E-Cigarette Enterprise

Company Update   
After obtaining packaging supplier qualifications for ZARA and Harman products, the company has announced that it has once again obtained packaging supplier qualifications from the well-known e-cigarette manufacturer JWEI Technology, providing integrated packaging services for its e-cigarette products. The company continues to make breakthroughs in acquiring new clients.   
Comments   
1. The new client acquisition phase began in 2014. JWEI Technology is a high-tech enterprise specializing in the research, production, and sales of e-cigarettes, holding a leading position in the e-cigarette industry, with 60 international standard production lines, over 3,000 employees, and a daily output of approximately 600,000 sets. The enormous production capacity (annual output exceeding 200 million sets) will bring ample orders for the company's paper packaging, promoting the continuous improvement of capacity utilization at the company's new bases (Dongguan, Suzhou, Chongqing), thereby driving rapid growth in performance.   
2. Deep cooperation with downstream clients and providing integrated packaging services is an important development strategy for the company. If e-cigarettes can achieve rapid development in China, it is possible that the company may extend its industrial chain in the e-cigarette field through equity participation, mergers, and acquisitions in the future.   
3. The company's ability to attract numerous well-known domestic and international consumer brands is closely related to its outstanding packaging design and research capabilities, integrated competitive advantages (able to meet all customer packaging-related needs, assist in cost reduction, shorten product launch cycles, and enhance brand strength), as well as its rapid response capabilities. In addition to having advantageous clients in the consumer electronics field, the company will also focus on mid-to-high-end consumer goods in the future.  
4. A packaging giant is rising in China, and the paper packaging industry is currently experiencing a rapid growth phase (CAGR 19%), with a large industry space (nearly 500 billion), and a fragmented competitive landscape (Top 10 market share is less than 10%). This presents a historical opportunity for the company to build a packaging giant through internal growth and external acquisitions. The future drivers for the company's sustained rapid growth are strong: ① Orders from old clients are increasing; ② Breakthroughs with new clients in consumer electronics, brand consumer goods, etc.; ③ External mergers and acquisitions, with the acquisition of Jinzhicai marking the beginning of the company's industry consolidation efforts.   
Valuation   
It is recommended to maintain profit forecasts. It is expected that EPS for 2014-2015 will be 0.78 yuan and 1.12 yuan, representing year-on-year growth of 60% and 44.5%, respectively.    Reiterate "recommendation". We are optimistic about the broad market space of the paper packaging industry, as well as the company's outstanding competitive advantages and client structure, which are expected to make it an industry consolidator; the company's growth logic is clear, and the acquisition of new clients will provide opportunities for the company's stock price to rise. The current stock price corresponds to a PE of approximately 27.3 times for 2014, and the valuation still has room for improvement relative to the expected CAGR of 52% over the next two years, with a target price of 31 yuan.   
Risks   
The fulfillment of customer orders may not meet expectations; significant fluctuations in raw material prices.
JWEI Technology
JWEI Technology is a high-tech enterprise specializing in the research, production, and sales of e-cigarettes, holding a leading position in the e-cigarette industry, with 60 international standard production lines, over 3,000 employees, and a daily output of approximately 600,000 sets. The enormous production capacity (annual output exceeding 200 million sets) will bring ample orders for the company's paper packaging, promoting the continuous improvement of capacity utilization at the company's new bases (Dongguan, Suzhou, Chongqing), thereby driving rapid growth in performance.   <\/p>

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