Recently, several listed paper companies have disclosed their semi-annual reports or first-half performance forecasts. The performance differences have become more pronounced. Jingxing Paper, Wuzhou Special Paper, Rongsheng Environmental Protection, etc., saw a significant increase in their parent company's net profit year-on-year in the first half. While companies like Shanying International and Yueyang Lin Paper reported a loss in their parent company's net profit.
"The uneven performance" has become a distinct feature of the paper industry in the first half of the year. From an overall industry perspective, profits have started to recover. According to data from the National Bureau of Statistics, in the first half of the year, the paper and paper products industry achieved a revenue of 689.79 billion yuan, an increase of 5.5%; the profit总额 was 19.61 billion yuan, an increase of 27.5%.
"Some specialized paper types performed well, but the overall market demand remains to be observed," said a paper company executive to the Shanghai Securities News. Many industry insiders believe that the current demand side has not fully recovered. With the advancement of forest-pulp-paper integration, cost control ability has become the key to competition.
Some paper companies' performances have stabilized first
From the perspective of specialized paper types, "differing" was the key word for the paper industry in the first half of the year. Cao Xiangfen, an analyst at Zhuochuang Information, said that in the first half, the packaging paper market recovered moderately and profits were restored; the daily-use paper market showed a "volume increase and price decline" situation; the cultural printing paper market was under pressure from supply and demand, and paper prices were still falling.
Reflected in the performance, Hongkui Paper, a Hong Kong-listed company, achieved revenue of 14.8 billion Hong Kong dollars in the first half, an increase of 21.3%; it achieved a net profit of 1.373 billion Hong Kong dollars, an increase of 69.3%, with a profit growth rate far higher than the revenue growth rate.
The A-share specialty paper leader, Wuzhou Special Paper, also performed well. The company achieved revenue of 4.895 billion yuan in the first half, an increase of 18.76%; it achieved parent company's net profit of 230 million yuan, an increase of 88.95%. During the reporting period, the company's multiple new production lines in Hubei were put into operation, becoming an important support for the growth of the company's performance.
Hengda Xincai achieved revenue of 548 million yuan in the first half, an increase of 5.16%; it achieved parent company's net profit of 53.848 million yuan, an increase of 57.29%. In addition, Jingxing Paper, Rongsheng Environmental Protection, and other companies also saw significant improvement in their performance in the first half.
Although the industry as a whole shows signs of recovery, some enterprises that rely on cultural paper and packaging paper are still at the bottom of the cycle. Shanying International reported a loss of 682 million yuan in its parent company's net profit in the first half, turning from profit to loss, mainly due to the decline in the gross profit margin of packaging paper; Yueyang Lin Paper reported a net loss of 9.75 million yuan in the first half, mainly due to the decline in the average sales price of products.
In the opinion of the relevant person in charge of Wuzhou Special Paper, some paper companies' profit growth is, on the one hand, due to the low base effect, and on the other hand, it comes from the intensified industry differentiation. Companies with integrated industrial chain and diversified product structures perform relatively better, while companies with a single product still face pressure.
An industry insider said that wood pulp accounts for 60% to 70% of the cost of paper production. In the first half, the price of imported wood pulp decreased, and the appreciation of the RMB also reduced the procurement cost for some enterprises.
The layout of forest-pulp-paper integration is accelerating
The growth in demand is limited, and cost has become the key for paper companies to compete for profitability. Guo Yaping, an analyst at Longzhong Information, said that the enterprises with profit recovery are mostly large-scale paper companies. The improvement in profitability mainly comes from the large-scale paper companies' forest-pulp-paper integration layout, where the self-produced pulp capacity is gradually released, and the raw material costs decrease, resulting in an expansion of profit margins.
The relevant person in charge of Xianhe Co., Ltd. said that in the past, domestic wood pulp was highly dependent on imports. In recent years, as the leading paper companies have successively laid out their own pulp sources, the proportion of domestic pulp has increased, and the influence of overseas manufacturers on the domestic market pulp prices has weakened.
"China is already the world's largest paper producer. The core competitiveness of enterprises in the future must be the integration of all resources, especially the acquisition of forest resources," said the relevant person in charge of Wuzhou Special Paper.
While moving upstream, some paper companies are also shifting towards high-value-added products and extending their operations to the downstream sector.
Take Xianhe Co., Ltd. as an example. The company has been continuously advancing its "forest-pulp-paper integrated" strategy, and has also expanded into areas such as electronic materials and insulating materials. The company has also expanded to the downstream C-end market through its terminal brands and has established an overseas production base in Cambodia first.
"Papermaking is only an intermediate link in the industrial chain. We hope to connect the upstream and downstream, layout pulp and downstream terminal products, and increase product value and raise the gross profit margin," said a relevant person from Xianhe Co., Ltd. The company will focus on innovation leadership and rely on its own raw materials to develop more innovative products.
