The papermaking industry has sounded the alarm about the shortage of raw materials, and the industrial chain will enter a new round of rising cycle丨Bull and Bear Eyes

In early trading on January 15, the papermaking sector continued to rise. As of press time, Bohui Paper rose by more than 6%, Sun Paper rose by more than 4%, Rongsheng Environmental Protection rose by more than 3%, and Jingxing Paper rose by more than 3%. Industry, Chenming Paper, Minfeng Special Paper and other stocks all rose to varying degrees.

The Ministry of Ecology and Environment announced the first batch of waste paper import licenses in 2020 on December 23. The General Administration of Customs approved the import volume of 2.7835 million tons of waste paper, a 45% decrease from the first batch of licenses in 2019. The import volume of waste paper has shrunk significantly, which will undoubtedly sound the alarm about the shortage of raw materials. Some brokers predict that the total import volume of foreign waste will decrease by 50% in 2020. Conservative estimates suggest that the annual gap will be close to 10 million tons, accounting for 15% of total demand.

Since October 2019, paper prices have been changing. In early December, price increase letters from paper companies were flying all over the sky. Some paper companies even raised prices twice a week and immediately implemented the new price system. Since January this year, downstream cultural paper mills have frequently issued price increase letters, mainly for uncoated paper. The manufacturers involved mainly include Chenming, Sun, Asia Pacific Senbo, Galaxy Paper, Yueyang Forestry Paper, etc., with an increase of 100 Yuan/ton, execution time is February 1st. The shortage of raw materials and low total inventory are the main reasons why the industry generally believes that paper prices will enter a new round of rising cycle.

According to statistics from the Shanghai Securities News, in the A-share papermaking sector, the stock prices of paper companies such as Chenming Paper, Huatai Paper, Jingxing Paper, Qifeng New Materials, and Yueyang Forestry Paper are all in a net-breaking state. ; The price-to-book ratios of Hengfeng Paper, Shanying Paper, Qingshan Paper, and Minfeng Special Paper are less than 1.5. Even Bohui Paper, which has been cited many times by industrial capital, has a price-to-book ratio of only 1.63.

Currently, Huatai Shares has the lowest price-to-book ratio, which is only 0.68. The company is the largest newsprint production base in the country, with a market share of over 30%. The company is also among the first batch of paper companies with the highest proportion of foreign waste quotas in 2020, and has the advantage of low-cost operation.

At the same time, recently, institutions have increasingly conducted research on listed paper companies. For example, since December 2019, 14 institutions have visited Jingxing Paper for investigation. The company stated in the survey minutes that U.S. waste has certain properties of wood pulp and is the guarantee of the quality of waste paper products. If the supply is insufficient, higher-cost wood pulp needs to be used instead. The company has made plans to have no waste paper at all in 2021. Import quota plans. In 2020, the company expects to have an import quota of about 100,000 tons of waste paper. Moreover, the company has currently signed an agreement for approximately 380,000 tons of recycled pulp, which is enough to ensure the company's normal production.

West China Securities stated that cultural paper benefited from low pulp prices, and the profit per ton gradually increased, and recommended Sun Paper; the rising cost of waste paper and low inventory pushed up the downstream paper products, and the profit of packaging paper is expected to be restored, benefiting the target Jiu Dragon Paper and Shanying Paper; the white cardboard industry is accelerating its integration and the degree of concentration is certain to increase. Paper prices are expected to continue to rise after the year, benefiting the target Bohui Paper.

Shanxi Securities pointed out that due to the increase in environmental protection costs and high production and operation costs, leading paper industry leaders have raised prices one after another. The supply gap of waste paper is coupled with the factor of low inventory, and it is expected that the price of waste paper will enter an upward channel.