Analysis of the Competitive Landscape of Leading Enterprises in the Paper Industry in 2021

Main listed companies in the paper industry: at present the main listed companies in the domestic paper industry include Nine Dragons Paper (02689.HK), Lee & Man Paper (02314.HK), Chenming Paper (000488, 200488, 01812.HK), Sun Paper (002078) and so on.

Key data in this article: the course of enterprises' business layout, enterprises' product layout, enterprises' current capacity and output, and enterprises' operating conditions

1. Nine Dragons Paper VS Lee & Man Paper: the course of papermaking business layout

The paper industry is a basic raw material industry of the national economy, with typical large-scale industrial production characteristics such as continuous and efficient operation and significant economies of scale, and is an important industry closely related to social civilization and economic development. At present, China's leading paper companies are Nine Dragons Paper (02689.HK) and Lee & Man Paper (02314.HK); the two companies' courses of layout in the papermaking business are as follows:

1. Papermaking business layout and current operating status

—Product layout: evenly matched

In terms of main product layout, both companies' main products cover both paper categories and pulp categories, and they are evenly matched. On the paper side, Nine Dragons Paper's main products include carton board, culture paper, corrugating medium, coated grey-backed white board and specialty paper categories; Lee & Man Paper's main products include kraft linerboard, white-top kraft linerboard, high-strength corrugating medium, coated white board and tissue paper. On the pulp side, Nine Dragons Paper's main products include wood pulp and recycled pulp; Lee & Man Paper's main products include wood pulp and pulp board.

—Current capacity: Nine Dragons Paper has the edge

In terms of annual papermaking capacity, in 2020 Nine Dragons Paper had the edge. According to the company's public reports, as of the first half of 2020 Nine Dragons Paper's papermaking capacity reached 16.47 million tonnes and its pulping capacity reached 853,000 tonnes. According to its latest interim report, as of the end of 2020 Nine Dragons Paper's papermaking capacity reached 17.57 million tonnes; as of the end of 2020 Lee & Man Paper's papermaking capacity reached 6.53 million tonnes, tissue paper capacity reached 1.015 million tonnes, wood pulp capacity reached 180,000 tonnes and pulp board capacity reached 640,000 tonnes.

Note: Nine Dragons Paper data as of the first half of 2020; Lee & Man Paper data as of the end of 2020.

—Papermaking output: Nine Dragons Paper produces more

In terms of papermaking output, because of the capacity difference, from 2016 to 2020 Nine Dragons Paper's papermaking output was greater than Lee & Man Paper's. In 2020 Nine Dragons Paper's papermaking output was 16.15 million tonnes and Lee & Man Paper's was 6.3021 million tonnes, with Nine Dragons Paper producing twice as much as Lee & Man Paper.

1. Comparison of papermaking business performance: Nine Dragons Paper leads in revenue scale, but Lee & Man Paper is more profitable

In terms of enterprise operating conditions, from 2017 to 2020 Nine Dragons Paper's operating revenue was ahead of Lee & Man Paper's; in the second half of 2020 Nine Dragons Paper achieved revenue of 30.887 billion yuan and Lee & Man Paper achieved revenue of about 13.163 billion yuan.

In terms of gross profit margin, from 2017 to 2020 Lee & Man Paper's gross profit margin was higher than Nine Dragons Paper's. In the second half of 2020 Nine Dragons Paper's gross profit margin was 22.22%, and in 2020 Lee & Man Paper's gross profit margin was 20.90%. Looking at the overall trend, the gross margin gap between the two leading paper companies is continuously narrowing.

Note: Nine Dragons Paper's fiscal year runs from July 1 of the current year to June 31 of the following year, and Lee & Man Paper's fiscal year runs from January 1 to December 31; Lee & Man Paper's revenue in Hong Kong dollars is converted to RMB at the annual average exchange rate; Nine Dragons Paper's 2020 gross profit margin is the figure for the second half of the year.

1. Forward-looking view: Nine Dragons Paper is China's "king of papermaking"

In the paper industry, an enterprise's production capacity and papermaking output determine its core competitiveness, while enterprise performance reflects the company's operating overview. Based on the analysis above, Forward Industry Research Institute believes that Nine Dragons Paper, because of its advantages in production capacity, papermaking output and enterprise revenue, is currently the "leading" Chinese paper enterprise.

——This article is reprinted from China Packaging Network (pack.cn). Original link: http://news.pack.cn/show-378333.html