Paper Industry Research

The opportunity to decide to investigate the paper industry was that I won a convertible bond from a paper industry, so I took the opportunity to understand the upstream and downstream relationships in this industry and the basic highlights

The paper industry chain starts from Upstream to downstream can be divided into: pulping - papermaking - paper product application; in the period when papermaking industry enterprises continue to develop industrial clusters, there are many leading companies in the papermaking industry extending to the upstream and downstream of the industrial chain, forming waste paper recycling - pulp Manufacturing-paper industry chain layout, such as Shanying Paper, Nine Dragons Paper, etc. China is a major pulp consumer, and wastepaper pulp occupies the mainstream. In 2018, wastepaper pulp output was 54.44 million tons, accounting for 75.6% of all pulp production. The overall domestic papermaking industry has overcapacity, and printing paper is the mainstream supply and demand. In 2018, both the output and consumption of the papermaking industry declined to varying degrees, and printing paper supply and demand are both mainstream. In 2018, the output of paper and paperboard in 11 provinces (autonomous regions and municipalities) in eastern my country accounted for 74.2% of the national paper and paperboard output; in terms of provincial structure, Guangdong, Shandong and Zhejiang are the main production areas.

1. Cultural paper

? Suitable for printing books, textbooks, magazines, covers, illustrations, notebooks, test papers, teaching materials, teaching aids, etc.

2. White cardboard

High-end gift boxes, cosmetic boxes, tags, handbags, brochures, high-end postcards; mid-to-high-end cigarette pack printing; milk packs, drink packs, disposable Paper cups, milk tea cups, noodle bowls, etc.

3. Household paper

Toilet paper, facial tissue, handkerchiefs, napkins, hand towels

4. Box board corrugated paper

5. Coated paper, special paper (such as thermal)

According to the manufacturing method, it can be divided into chemical pulp, mechanical pulp, and chemical mechanical pulp; according to the raw materials, it can be divided into wood pulp, straw pulp, bamboo pulp, cotton pulp, Waste paper pulp, etc.; according to the processing depth, it can be divided into refined pulp, bleached pulp, unbleached pulp, high-yield pulp, semi-chemical pulp, etc. The current mainstream pulp classification method on the market is based on raw materials, which are mainly divided into three categories: wood pulp, non-wood pulp and waste paper pulp.

The papermaking industry is characterized by intensive capital and technology and significant economies of scale. It has strong industrial correlation and large market capacity. More than 80% of the total papermaking products are used as production materials for news, publishing, and printing. , commodity packaging and other industrial fields, less than 20% is used for direct consumption by people. This industry is an important force driving the development of forestry, agriculture, printing, packaging, machinery manufacturing and other industries, and has become a new growth point for the development of China's national economy.

The industrial chain of the papermaking industry can be divided from upstream to downstream: pulping-papermaking-paper product application. The upstream pulping and equipment mainly involves pulp manufacturing and pulp equipment supply; pulp manufacturing can be divided into wood pulp, non-wood pulp and waste paper pulp; the papermaking link in the midstream, according to different product categories, can be divided into newsprint, cultural There are four sub-sectors of paper, packaging paper and special paper, including: 1) newsprint: mainly used in the newspaper industry; 2) cultural paper: mainly used in the printing and publishing industry, including coated paper and uncoated paper, and Coated paper also includes coated paper, coated white cardboard, etc.; 3) Packaging paper: mainly used in the packaging industry, usually including white cardboard, boxboard and corrugated base paper; 4) Special paper: the common ones are capacitor paper , cigarette paper, etc. Although wood pulp production is increasing year by year, waste paper pulp still occupies the mainstream position in my country. In 2019, my country's pulp output was 72.07 million tons, of which wood pulp output was 12.68 million tons, accounting for 17.59% of the total pulp output; waste paper pulp output was 53.51 million tons, accounting for 74.25% of the total output; non-wood pulp output was 5.88 million tons, with an output of The production ratio is 8.16%.

Judging from the production of non-wood pulp, rice-wheat straw pulp and bamboo pulp are the main ones. In 2019, my country's rice and wheat straw pulp production reached 2.22 million tons, accounting for 37.76% of the total non-wood pulp production; bamboo pulp production was 2.09 million tons, accounting for 35.54% of the non-wood pulp production; bagasse pulp production was 700,000 tons, accounting for 35.54% of the total non-wood pulp production. is 11.90%. The output proportion of other non-wood pulp types is less than 9%.

Papermaking 1) Pulp: Mets? Fibre’s softwood pulp quotation in September was raised by US$10/ton to US$600/ton. Pulp futures on the Shanghai Futures Exchange have been rising in recent days, and traders' spot prices of softwood pulp have followed suit, but high offers have been sparsely traded. 2) Cultural paper: This week, the paper mill issued a price increase letter for coated paper and offset paper. The price will be increased by 100 yuan/ton in September.

3) White cardboard: In the early stage, the paper mill issued a price increase letter of 500 yuan/ton, traders followed the increase, and the downstream price was 200-300 yuan/ton. The mainstream transaction price of 250g white cardboard returned to around 6,000 yuan/ton. September-October is the traditional peak season. Overseas demand is getting warmer, and downstream companies are positive about the market outlook. 4) Container board corrugated paper: After three weeks of negative decline, the price of finished paper stopped falling and stabilized this week. The prices of individual paper mills adjusted slightly. Among them, the shipping quotations of Shanying Paper, Fujian Liansheng, and Hubei Rongcheng increased by 50-100 yuan/ ton. We continue to recommend the white cardboard industry, which has an improving competitive landscape; the price of cultural paper continues to pick up, with steady price increases, and we recommend Sun Paper, which has growth attributes.

On Monday afternoon, pulp futures prices continued to rise, with the main contract hitting the daily limit for the first time since its listing, reaching a maximum of 4,998 yuan/ton, a new high since May 2019. Due to the price increase of imported pulp, the expected domestic peak season demand and the recovery of overseas demand, inventories continued to decline, and downstream paper mills actively promoted price increase letters.

The overall production capacity of the domestic paper industry is overcapacity, and printing paper is the mainstream of supply and demand.

China's paper industry products are in oversupply, while waste paper, paper (wood) pulp and other raw materials are in short supply. At the same time, as the world's largest importer of waste paper and pulp, China's papermaking industry is also extremely dependent on the supply of upstream raw materials globally. Therefore, China's paper industry as a whole is in a weak position in the upstream and downstream industrial chains and has weak bargaining power.

Papermaking companies are concentrated in the eastern region, and industry concentration is still low

Judging from the overall production and sales data of the industry, after the environmental protection policy since 2010 to reduce production capacity, the papermaking industry has The CR10 has gradually increased from 28.70% in 2011 to 44.10% in 2018. After the US paper industry has experienced environmental protection legislation to reduce production capacity and industry mergers and acquisitions, the CR10 has reached about 90%.

Judging from the CR4 data calculated based on the sales data disclosed by each company, the market share of the four leading companies, Nine Dragons Paper, Lee & Man Paper, Shanying Paper, and Sun Paper, in 2018 It was only 27.58%, while the CR4 of the US paper industry was 24% in 1972 and reached 29% in 1984 after "ten years of environmental protection legislation". After environmental protection and overcapacity reduction, some small and medium-sized backward production capacities have been eliminated, and industry concentration has increased. As industry leaders gradually begin to expand production capacity, Qianzhan believes that the concentration of the paper industry is expected to further increase.

Combined with the turnover rate, stock price and K-line trend, it was finally determined that the stocks in the paper industry sector that are most worthy of band or medium and long-term buying are Songyang Resources (603863), Jinghua Laser (603607), Xianhe Holdings (603733), Zhongshun Jierou (002511), Rongsheng Environmental Protection (603165), and Yibin Paper (600793).

This year’s papermaking industry can be described as a world of ice and fire. The stock prices of packaging paper companies Bohui Paper (600966.SH) and Sun Paper (002078.SZ) have reached new highs, but Chenming Paper (000488.SZ), the leader of machine-made paper, is struggling in terms of performance and stock price.

Jingxing Paper

Paper Industry, the company is a large enterprise with multiple subsidiaries and a certain reputation in the papermaking and packaging industries. It is the largest professional manufacturer in the country. One of the paper-making enterprises that mainly produces high-grade kraft boxboard paper. The company's leading products are kraft boxboard paper, white kraft cardboard, high-strength corrugated base paper, yarn tube paper, cartons and other series of products.

In 2019, base paper accounted for 83.94% of revenue, with a gross profit margin of 10.72%; cartons and cardboard accounted for 9.37% of revenue; household paper accounted for 6.69% of revenue, and the overall gross profit margin was 10.97%. Business is mainly concentrated domestically.

Since the company is a highly cyclical industry, it is suitable to use the price-to-book ratio and the price-to-sales ratio for valuation. The current price-to-book ratio and price-to-sales ratio are 0.876 and 0.794 respectively, which are in the 13.52% and 17.43% quantiles, which are relatively low.

Shanying Paper

The products of the packaging business segment are widely used and the product technology is advanced. The production capacity base is located in the domestic core economic zone, with a production capacity of 1.4 billion square meters per year. In 2019, it acquired Zhongshan Zhongjian and quickly entered the electronic product packaging market in South China. As of the end of 2019, Shanying Paper had 28 packaging and printing companies, with an output of more than 1.2 billion square meters in 2019.

The customers of Shanying Paper’s packaging segment are mainly food and beverage and white home appliance manufacturers, and it continues to increase its 3C manufacturer customers. The packaging segment schedules production based on orders from downstream customers. The lead time for customer orders is generally one week to half a month. Therefore, Shanying Paper can take advantage of its integrated industrial chain to reduce inventory and stocking levels.

Yueyang Forest Paper

Sun Paper

Yibin Paper

Xianhe Co., Ltd.

As a large-scale domestic special Paper company, Xianhe Co., Ltd. (603733.SH, hereinafter referred to as the "Company") is currently one of the largest domestic special paper manufacturers. It is also the domestic special paper manufacturer with the most complete varieties and the most comprehensive process technology. It is one of the few that can carry out large-scale paper manufacturing. Enterprises that produce large-scale high-end special paper to replace imports and participate in global competition have formed strong scale advantages, technological advantages, brand and customer advantages.

Rongsheng Environmental Protection

Qingshan Paper

Songyang Resources

China Paper Network

Reference materials:

1/article/FLE5CR8R0514DO74.html The profit and loss status of China's paper industry from January to June 2020 is released

2/p/83851835 Forecast for 2019: "Industry Panorama of China's Paper Industry" ( Attached is the current situation, competitive landscape, trends, etc.)