Рекорды: Hexing, Yuto и ORG все преодолели отметку в 10 млрд юаней по выручке — как создаются сверхгиганты в сфере печати?

For the printing industry, 2020 was a year worth commemorating.

On the one hand, the sudden outbreak of the pandemic left most owners in the industry feeling deeply anxious and depressed. Even though the final results were not as bad as once imagined.

On the other hand, in this year overshadowed by the pandemic, three major players saw their revenue break the 10 billion yuan mark. For China's printing industry, this was a record-setting and unprecedented achievement.

According to the annual reports already released: in 2020, Hexing Packaging achieved revenue of 12.007 billion yuan, up 8.20% year on year. It is still one step away from its 2018 revenue peak of 12.166 billion yuan.

Yuto Technology achieved revenue of 11.789 billion yuan, up 19.45% year on year. After narrowly missing the 10 billion yuan mark by a gap of 155 million yuan in 2019, Yuto turned the goal that had been within reach into reality after another year of effort.

Org Packaging achieved revenue of 10.561 billion yuan, up 12.72% year on year. For it, breaking through the 10 billion yuan mark was long expected. In an article at the end of 2018, Sanhao Tongxue once said that another 10-billion-yuan printing and packaging enterprise was about to emerge - that referred to Org Packaging.

At the time, Org announced that it planned to acquire the four China plants of Ball Corporation, the world's leading metal can printing company, for USD 205 million (about 1.4 billion yuan).

In 2017, Ball's four plants in China together achieved revenue of 3.068 billion yuan, which combined with Org's 7.342 billion yuan reached a total of 10.410 billion yuan.

For Org, as long as the acquisition was completed, there would be no suspense about revenue breaking 10 billion yuan.

Revenue of the three major players (unit: 100 million yuan)

Speaking now, the three major players breaking 10 billion yuan in revenue seems like a natural outcome achieved with ease. Yet going back 10 years, almost no one in the industry would have believed that China's printing industry would produce several 10-billion-yuan enterprises in such a short time.

According to data available to Sanhao Tongxue: in 2010, the largest printing enterprise in China with publicly visible data was RR Donnelley China, which achieved product sales revenue of 3.197 billion yuan that year, a gap of 6.803 billion yuan from the 10 billion yuan mark.

In the same year, the revenue of Hexing Packaging, Yuto Technology and Org Packaging was 1.521 billion yuan, 1.609 billion yuan and 1.963 billion yuan respectively.

Within a decade, why did these three enterprises stand out and be the first to join the ranks of 10-billion-yuan players?

1. Why them?

Perhaps it is not merely a coincidence that the three major players started their businesses at very close points in time.

Among them, Hexing Packaging was founded in 1993; it took about 25 years to go from zero to first crossing the 10 billion yuan mark in 2018.

Org Packaging was founded in 1994 and produced its first beverage can in 1995; it took about 26 years to go from zero to breaking the 10 billion yuan mark.

Yuto Technology started its business in 1996 and realized its 10-billion-yuan dream in 2020, taking about 24 years.

Among the three major players, Hexing Packaging focuses on corrugated cartons and Org Packaging focuses on printed metal cans, with relatively simple and clear product structures.

In 2020, Hexing Packaging's revenue from corrugated cartons was 9.086 billion yuan, accounting for 75.67% of total revenue. Org Packaging's revenue from printed metal can products was 9.352 billion yuan, accounting for 88.55% of total revenue.

In terms of size, the corrugated carton and printed metal can markets differ greatly: the former can reach an annual market size of 200-300 billion yuan, while the latter is only about 50-60 billion yuan. So why can both produce enterprises of the 10-billion-yuan scale?

That a large market breeds large enterprises is easy to understand and needs little explanation.

The main reason the printed metal can market, which is not very large in size, can produce giants may be that: the number of downstream customers is small, but they are huge in size and have stable demand for packaging cans, which can provide printed metal can enterprises with a considerable number of long-run orders, thus giving this market a naturally high degree of concentration.

For example, Org's most important customer, Red Bull China, contributed revenue of 4.855 billion yuan in 2020, accounting for 45.97% of total revenue.

If you can capture one such major customer, does that give you the foundation to grow bigger and stronger?

Among the three major players, Yuto Technology has a relatively complex product structure. Simply put, it is known for premium paper packaging; in 2020 such products contributed revenue of 9.109 billion yuan, accounting for 77.26% of total revenue.

However, under premium paper packaging there are also several sub-categories, including consumer electronics packaging, liquor packaging, cigarette packaging, cosmetics packaging, food packaging and luxury goods packaging.

In addition, in recent years Yuto Technology has also made major moves into eco-friendly paper molding and has entered products such as plastic packaging and commercial printing.

Of course, the most important reason Yuto Technology could grow into a 10-billion-yuan giant in 24 years is perhaps still that: it seized the opportunity of the booming consumer electronics industry represented by mobile phones and captured a group of world-class customers, thus laying the foundation for its subsequent leapfrog development.

Doing the same corrugated carton, printed metal can and consumer electronics packaging businesses, why were these three major players, rather than other enterprises, the first to break through 10 billion yuan?

The reasons behind this are quite complex. They relate not only to the owners' vision, decisiveness and ability to obtain resources; sometimes a bit of opportunity and luck is also needed.

However, the three major players also share one thing in common: they have a strong awareness of capital, and all actively treated going public as a booster for corporate development.

Among them, Hexing Packaging went public earliest, listing on the Shenzhen Stock Exchange in 2008; Org Packaging listed on the SME Board of the Shenzhen Stock Exchange four years later in 2012; another four years after that, Yuto Technology also completed its IPO on the Shenzhen Stock Exchange.

The boost that listing gives to corporate development is mainly reflected in: smoother financing channels, making it easier to obtain essential funding support whether the company sticks to organic growth or pursues M&A expansion.

For example, in Hexing Packaging's journey toward becoming a 10-billion-yuan player, two decisions were crucial: one was launching the acquisition of International Paper's 18 carton plants in China and Southeast Asia in 2016; the other was stepping up efforts in the industry chain services business starting in 2016.

Compared with 2016, Hexing Packaging's revenue in 2020 grew by 7.447 billion yuan, while the industry chain services business grew by 4.072 billion yuan; together with the 18 acquired plants that originally belonged to International Paper, the two contributed most of Hexing's revenue growth in recent years.

And in Org Packaging's journey toward becoming a 10-billion-yuan player, the acquisition of Ball Corporation's four China plants in 2019 for about 1.4 billion yuan was likewise crucial.

As for Yuto Technology, although it has made few large acquisitions since going public, it has frequently invested heavily in building plants across the country, with planned investment of no less than 4-5 billion yuan.

Without the support of the capital market, even a major player would find it hard to make such bold moves with ease, wouldn't it?

1. The growth curves of the three major players

How were the three 10-billion-yuan players forged? The reasons behind it are complex, and what Sanhao Tongxue has said above can only scratch the surface.

For any of the major players, there is at least one point that cannot be ignored: being able to catch up with the rapid development of China's economy over the past two or three decades is the greatest fortune.

The reasons are too complex to explain in a few words, but data are relatively objective and can provide more useful information.

Through some effort, Sanhao Tongxue dug up the 13 years of revenue data of the three major players from 2008 to 2020, and will now share them with you.

By 2008, Hexing Packaging, Yuto Technology and Org Packaging had each been in business for about 15, 12 and 14 years respectively.

In that year, both Yuto Technology and Org Packaging had already broken the 1 billion yuan mark, with revenue of 1.406 billion yuan and 1.254 billion yuan respectively.

Hexing Packaging stood at 638 million yuan, equivalent to 45.38% of Yuto's and 50.88% of Org's.

Starting in 2010, Org Packaging was the first to gain momentum, achieving revenue of 1.963 billion yuan that year, a sharp year-on-year rise of 51.12%, overtaking Yuto's 1.609 billion yuan and Hexing's 1.521 billion yuan in one stroke.

Org's leading position lasted until 2016. That year it achieved revenue of 7.599 billion yuan, while Yuto and Hexing posted 5.542 billion yuan and 4.560 billion yuan respectively.

From 2010 to 2016, Yuto Technology maintained a scale advantage over Hexing Packaging in most years.

However, the two were once very closely matched in revenue, with only a small gap. In 2011, Hexing even overtook Yuto for a time with a lead of 137 million yuan.

Revenue growth curves of the three major players (unit: 100 million yuan)

In 2017, as the effects of the acquisition of International Paper's 18 plants emerged and the industry chain services business gained momentum, Hexing Packaging came from behind, with revenue surging 91.83% year on year to 8.748 billion yuan, overtaking Org's 7.342 billion yuan and Yuto Technology's 6.948 billion yuan in one stroke.

In 2018, Hexing Packaging's revenue rose sharply again by 39.08% to 12.166 billion yuan, becoming the first 10-billion-yuan printing giant in China with publicly visible data.

In the same year, Yuto Technology achieved revenue of 8.578 billion yuan, up 23.46% year on year, completing its overtaking of Org Packaging, whose revenue was 8.175 billion yuan.

In the following two years, Hexing Packaging's revenue fluctuated somewhat but remained steadily above 10 billion yuan.

After narrowly missing 10 billion yuan in 2019, Yuto Technology achieved its wish in 2020 with revenue of 11.789 billion yuan, only 218 million yuan short of Hexing's 12.007 billion yuan.

Org Packaging, with the help of its acquisition of Ball Corporation's China plants, passed the 9 billion yuan and 10 billion yuan round-number thresholds in succession, joining the ranks of 10-billion-yuan players in the same year as Yuto.

Looking across the revenue growth curves of the three major players from 2008 to 2020, Yuto Technology's performance was the steadiest, with its highest year-on-year growth of 41.29% in 2014 and its lowest of 1.71% in 2009.

During this period, Yuto had no year of negative growth, and apart from 2009 its year-on-year growth stayed above 10%, which is quite remarkable.

Org Packaging was the first to gain momentum starting in 2010, with year-on-year revenue growth of 51.12% that year, and it stayed above 15% until 2015.

Starting in 2016, Org's growth fell below 15%, and in 2017 it recorded negative growth of 3.38%. Overall, it showed a pattern of "high first, low later".

Hexing Packaging's revenue growth maintained a good level in most years. For example, in 2009, 2010 and 2016 it reached 38.87%, 71.67% and 59.89% respectively. However, owing to its low starting base, its revenue scale before 2016 basically ranked behind Org Packaging and Yuto.

It was only with the completion of the acquisition of International Paper's 18 plants and the advancement of the industry chain services business that Hexing Packaging's revenue growth curve rose sharply from the ground up.

Compared with 2008, the revenue of Hexing Packaging, Yuto Technology and Org Packaging in 2020 grew by 17.82 times, 7.38 times and 7.42 times respectively.

1. Who will be the first to break through 20 billion yuan

From starting at zero to joining the ranks of 10-billion-yuan enterprises, all three major players took about 25 years.

Of course, breaking through 10 billion yuan was very likely a dream they only developed in recent years, rather than a plan they were born with.

The reason is simple: at the start of a business, most enterprises cannot even figure out whether they will survive or how many years they can last, let alone have any grand dreams.

In any case, the 10-billion-yuan goal has already been trampled underfoot by the three major players. What even grander dreams do they have for the future?

Among the three, Hexing Packaging's blueprint is the clearest: as early as 2016, it put forward the strategic goal of "10 billion in manufacturing, 100 billion in services".

Today, although its revenue has exceeded 10 billion yuan for three consecutive years, its revenue from packaging manufacturing and from industry chain services stands at only 7.706 billion yuan and 4.300 billion yuan respectively, both short of the "10 billion in manufacturing, 100 billion in services" goal, with the latter still very far off.

Another major player, Yuto Technology, also expressed in 2017 the vision of "targeting 10 billion in the short term and a 100-billion-yuan enterprise in the long term".

However grand the dream, the road still has to be walked step by step.

After successfully breaking through the highly symbolic 10 billion yuan mark, Sanhao Tongxue's small question for the three major players is: who is likely to cross the next round-number threshold - 20 billion yuan - the fastest?

Judging from their existing businesses and product layouts, both Hexing Packaging and Yuto Technology have a very strong likelihood of breaking through first.

For Hexing Packaging, the corrugated carton market it is based in is sizable and offers huge room for continued consolidation. If its industry chain services business can keep growing at 20-30% a year, it may take only about five years for revenue to exceed 20 billion yuan.

In addition, since 2019 Hexing Packaging has also been making major moves into folding carton products including liquor packaging and food packaging, with a near-term revenue target of "3 billion in 3 years". If achieved on schedule, this will undoubtedly add momentum to crossing the 20 billion yuan mark as soon as possible.

Unlike Hexing, Yuto has made less effort in acquisitions in recent years, focusing mainly on building its own plants. But looking only at its growth curve and business layout in recent years, Yuto Technology may be even more likely than Hexing Packaging to break through the 20 billion yuan mark first.

Annual reports show that the smart factories and eco-friendly packaging business that Yuto has invested heavily in in recent years are still in the early stage of ramping up; once production potential is fully released, they are expected to drive its revenue quickly to a new level.

At the same time, Yuto plans to operate its supply chain business independently in 2021, which could become an important potential growth driver.

As things stand, among the three major players, Org Packaging will probably have the hardest time breaking through the 20 billion yuan threshold. This is mainly constrained by the relatively limited total market size of printed metal cans.

Moreover, with the withdrawal of some foreign-funded enterprises and the land-grabbing expansion of peer giants such as Baosteel Packaging, Shengxing Packaging, COFCO Packaging and Jiamei Packaging, the domestic printed metal can market landscape is gradually stabilizing.

To achieve a major breakthrough in such a market environment, Org Packaging must resort either to large-scale M&A or to cross-industry expansion. Neither is very easy to carry out.

In any case, having three major players break 10 billion yuan in revenue in the same year is already an unprecedented breakthrough for the printing industry.

As for who will be the first to go further in the future, let time tell.

——This article is reprinted from China Packaging Network (pack.cn). Original link: http://news.pack.cn/show-377402.html