Analysis of the current situation of 22 listed companies in the paper industry in 2018

More than 1/3 of the company's net profit fell year-on-year, poor performance

At present, there are 22 listed companies in the domestic paper industry, including Nine Dragons Paper and Lee & Man Paper, which are listed on the Hong Kong stock market. From the performance of 2017 for the whole year, the paper industry's performance in 2017 was generally good, and all companies' revenues expanded. Among them, only the two shares of Anne and Guangdong Ganhua declined. The proportion is less than 10%. Among them, there are 6 companies with annual revenues exceeding 10 billion yuan, and 5 companies with net profit exceeding 2 billion yuan. Nine Dragons Paper is far ahead of other companies in terms of revenue scale and net profit scale. Ranked first in the industry. Overall, the current leading companies in terms of revenue and net profit are mainly Nine Dragons Paper, Chenming Paper, Lee & Man Paper, Sun Paper and Shanying Paper.

From the performance of companies in the paper industry in the first three quarters of 2018, there was a significant decline compared to the same period in 2017. Specifically, as the industry leader Nine Dragons Paper did not disclose the latest financial data, only the remaining 21 companies were analyzed. In terms of revenue, Mingfeng Special Paper and Guangdong Ganhua both experienced a year-on-year decline; net profit performance was even worse. Eight companies' net profit declined year-on-year, accounting for more than one-third of the total profit. It includes companies with large revenues such as Chenming Paper and Bohui Paper. Therefore, overall, in the first three quarters of 2018, the performance of China's papermaking enterprises showed a downward trend, and the development faced certain difficulties, which was mainly due to the tightening of raw material supply and the sluggish downstream demand.

Alleviate the bilateral squeeze of supply and demand, and the trend of industrial chain integration is highlighted

From the perspective of the industrial chain, the papermaking industry belongs to the midstream manufacturing industry. The upstream is the raw materials such as pulp and waste paper, and the downstream is the packaging industry. Whether the papermaking enterprises can obtain considerable income and the supply of raw materials is sufficient and the downstream demand is strong. . On the one hand, at present, China's paper industry has a large dependence on overseas raw materials. Since 2018, the tightening of external waste quotas and the impact of trade friction on pulp imports have led to tight supply of paper raw materials, and papermaking costs have risen sharply. On the other hand, downstream The lack of demand in the packaging sector has also led to a continuous rise in the inventory of the paper industry, and the company is also facing difficulties in generating revenue. Bilateral pressures on supply and demand ultimately led to a decline in corporate performance.

In order to link this situation, papermaking enterprises have developed to the direction of industrial chain integration through the extension of upstream and downstream, in order to achieve cost reduction from the source control of raw materials, and to develop packaging business to alleviate the impact of market fluctuations. Taking Shanying Paper as an example, the company is currently the most integrated enterprise. The company's papermaking business and packaging business accounted for 72% and 21% respectively in 2017, showing that the downstream packaging business has achieved remarkable results; the mountain eagle in 2018 The paper industry acquired the WPT, a Dutch waste paper purchase company, to improve the closed loop of the industrial chain of waste paper-base paper-packaging-waste paper. In addition, Nine Dragons Paper's entire industrial chain layout is relatively complete; and Sun Paper, Chenming Paper and Lee & Man Paper and other head companies have achieved cost advantages over the industry through business layout in the pulp chain upstream of the industrial chain. .

Solve the core problem of raw material supply and accelerate the layout of overseas production capacity

In addition, in view of the serious dependence on overseas raw materials in the domestic papermaking industry, leading to restrictions on raw materials in overseas markets, many companies have begun to deploy overseas production capacity to obtain more development space. For example, some leading enterprises have already carried out a large number of production capacity or construction of raw material bases overseas to obtain sufficient raw material supply by virtue of their significant financial strength. Among them, Nine Dragons Paper, Lee & Man Paper, Shanying Paper, and Sun Paper all accelerated their overseas distribution, and achieved capacity through the layout of production capacity in areas with abundant forest resources and low labor costs in Southeast Asia, Vietnam, Malaysia and other Southeast Asian countries. Advantages; by means of layout in the United States in order to obtain high quality waste materials. In addition, Hengan International, Jinguang APP, Asia Pacific Sempor, China Paper, Zhenglong Paper and other enterprises are also accelerating overseas production capacity. It is expected that the overseas production capacity of domestic paper companies will continue in the future.

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