26 A-Share Paper Companies' Report Cards Go Head-to-Head: Three Account for Half of Revenue, But Who Makes the Most Money

Two-thirds of 2021 has already passed. As autumn approaches, a number of paper companies have also reaped a bumper harvest.

Recently, 26 A-share listed companies in China's paper industry successively disclosed their 2021 interim reports. How has the paper industry been performing in the first half of this year? Let us find out from the interim reports.

Three companies topped 10 billion yuan in revenue, with Chenming Paper ranking first

In terms of revenue,

three companies had revenue exceeding 10 billion yuan in the first half of 2021, namely Chenming Paper, Sun Paper and Shanying International

, and all were above 15.1 billion yuan. Together, the three generated revenue of about 48.2 billion yuan, accounting for half of the industry's total revenue of 95.1 billion yuan.

In terms of revenue growth, 23 companies achieved positive growth, of which 7 companies saw revenue grow by more than 50% year on year.

Sun Paper became the profit king, while Qingshan Paper grew the fastest

Judging from the interim report data, all 26 companies were profitable, among which

Sun Paper had the largest net profit, at 2.232 billion yuan. Four companies had net profits exceeding 1 billion yuan, namely Sun Paper, Chenming Paper, Bohui Paper and Shanying International.

It is worth noting that although Bohui Paper's revenue was less than half that of each of the other three, its profit reached 1.514 billion yuan, demonstrating strong profitability.

In terms of profit growth, 21 companies achieved positive net profit growth, of which 14 saw net profit grow by more than 100% year on year,

Qingshan Paper posted the largest increase, up 887.31% year on year.

The recovery in the paper industry's prosperity benefits companies

Papermaking concerns the national economy and people's livelihood, and is closely related to the macroeconomic environment. Paper companies delivered satisfactory results, largely thanks to the overall recovery of the industry. In the first half of 2021, as the domestic pandemic was brought under control and the macroeconomic environment recovered across the board, demand for paper products as basic means of production and daily life was gradually released. According to data released by the Ministry of Industry and Information Technology, from January to June 2021, the national revenue of papermaking and paper products reached 714.2 billion yuan, up 24.7% year on year; total profit was 48.43 billion yuan, up 77.2% year on year.

Building a bigger and stronger industrial chain is the development trend

The pandemic drove up upstream raw material prices and raised overall industry costs, which is a major test for the paper industry. But for companies with a complete industrial chain, their cost advantages are more easily highlighted.

Chenming Paper laid out its industrial chain integration strategy as early as twenty years ago. Based on the raw material cost advantage of its 4.3 million tonnes of self-produced pulp and its supporting water and land transport advantages, it effectively controls costs to ensure its competitiveness. For example, Chenming Paper's self-produced wood pulp costs several hundred yuan less than the general market price, and its overall transport costs are also better than those of its peers. Around the papermaking industrial chain, Sun Paper has also pursued a diversified layout and has now built three major bases in Shandong, Guangxi and Laos. With the paper and pulp projects at the Guangxi base successively coming into production in the second half of this year, Sun Paper's pulp and paper capacity will exceed 10 million tonnes. After Bohui was acquired by APP (China), it can enjoy the cost advantages brought by the group's forestry-pulp-paper integration layout, effectively enhancing its pulp cost advantage and profitability.

Innovating technology and products wins the initiative

Judging from the layouts of the various paper companies, continuous innovation in products and technology has also contributed to strengthening their competitiveness. In the first half of the year, Bohui Paper seized the opportunities brought by the policy shifts toward "replacing grey with white" and "replacing plastic with paper", stepped up new product R&D and upgrading, and successfully developed new products such as high-grade food board, cupstock base paper and coated cupstock paper. It also developed new products such as anti-counterfeit cigarette packaging, specialty art board, premium name card paper, white-top kraft linerboard and blister board to meet the differentiated needs of special customers. Chenming Group accelerated the pace of replacing old growth drivers with new ones and upgraded high-end capacity, with high-end products accounting for more than 95%. To achieve differentiated product competition, Sun Paper is adjusting its business strategy in a timely manner. It has now built a relatively complete scientific and technological innovation system in R&D and has a professional, efficient and highly skilled R&D team, with the company's annual R&D investment ratio ranking among the top in the industry.

In this round of results announcements, some were pleased while others were worried. What worries them is that the profits all belong to others.

As mentioned above, whether it is deepening the industrial chain or innovating products and technology, companies need sufficient cash flow to invest continuously. In other words, it is difficult for non-leading companies to do so. It can be imagined that amid stricter environmental protection and rising costs, small and medium-sized enterprises lacking a voice will face increasing survival pressure. Packaging plants and printing plants in the mid- and downstream are especially hard hit. According to Carton Talk,

"Although midstream board and box companies saw a relatively large increase in turnover, their profit margin growth was not high." "Upstream raises prices at will, downstream suffers miserably" is even more a reflection of many people's state of mind.

As the traditional peak demand season of "Golden September and Silver October" arrives, the trend is currently unclear and the future hard to predict, with a strong wait-and-see atmosphere across the market.

——This article is reprinted from China Packaging Network (pack.cn). Original link: http://news.pack.cn/show-378161.html