Обзор публичных компаний-производителей бумаги в 2020 году

The world today is undergoing major changes unseen in a century, and the global COVID-19 pandemic of 2020 accelerated the evolution of these changes: economic globalization encountered headwinds, the world economy was sluggish, and international trade and investment shrank substantially. China's national economy went through the trilogy of "stabilizing, safeguarding and seizing opportunities," overcame numerous difficulties, and the industry basically maintained stability and health, becoming the first among the world's major economies to achieve positive growth; a new development pattern with domestic circulation as the mainstay and domestic and international dual circulation promoting each other is being built at an accelerated pace.

After nearly 30 years of rapid development, China's paper industry has grown continuously in scale and has changed from a shortage type in the past to a basically balanced type, with most products basically meeting domestic market demand. According to survey data from the China Paper Association, in 2020 there were about 2,500 paper and paperboard production enterprises nationwide, with national paper and paperboard output of 112.6 million tonnes, up 4.60% year on year. Consumption was 118.27 million tonnes, up 10.49% year on year, with per-capita annual consumption of 84 kg (1.4 billion people).

From 2011 to 2020, the average annual growth rate of paper and paperboard output was 1.41%, and that of consumption was 2.17%. According to National Bureau of Statistics data, in 2020 there were 4,184 paper products production enterprises above designated size nationwide, with output of 68.6 million tonnes, down 4.97% year on year; consumption of 65.52 million tonnes, down 4.85% year on year; imports of 160,000 tonnes and exports of 3.24 million tonnes. From 2011 to 2020, the average annual growth rate of paper products output was 4.76%, and that of consumption was 4.82%.

As an important basic raw material industry, the paper industry occupies an important position in the national economy; it relates to every aspect of the national economy, and its products are used in numerous fields of culture, education, science and technology and the national economy. With the advancement of environmental protection measures and supply-side reform, the phased and structural oversupply in the paper industry will improve significantly, and the supply structure will be continuously optimized. In the future, guided by a green, environmentally friendly and ecological development approach, supply and demand in the paper industry will tend to tighten.

1. Overall overview of listed companies

According to the latest industry sector classification of the Shanghai and Shenzhen stock exchanges, as of the end of 2020 there were 31 listed companies engaged in papermaking and paper products operating normally on the Shenzhen and Shanghai markets. This year the whole sector's profitability indicators improved considerably, awareness of whole-industry-chain (industrial or service integration) safety and the concept of green, environmentally friendly development continued to strengthen, and the recyclable development characteristics of the paper industry were fairly fully demonstrated in its social image.

1.1 Leading enterprises highlight their advantages, and overall operations continue to develop steadily

Facing a complex environment, companies overcame many difficulties and, apart from a few poorly run enterprises, overall performance continued to improve steadily. The 31 listed companies had total share capital of 31,247.33 million shares (of which 27,185.90 million were unrestricted tradable shares) (see Table 1); total assets of 328.1 billion yuan, a net increase of about 15.4 billion yuan over 2019, up 4.93%; net assets of 149 billion yuan, a net increase of 12.5 billion yuan over 2019, up 9.18%; and main business revenue of 185.3 billion yuan, a net increase of 20.5 billion yuan over 2019, up 12.44%;

They achieved net profit of 12.365 billion yuan, a net increase of 1.609 billion yuan over 2019, up 14.96%. The average debt-to-asset ratio was 54.59%, down 1.77 percentage points from 2019 and effectively controlled at a reasonable level below 60%. Average net profit margin on sales in 2020 was 6.67%, up 0.15 percentage points from 2019; average return on total assets in 2020 was 3.77%, up 0.33 percentage points from 2019.

In particular, key enterprises continued to bear the sector's profit responsibility: 10 companies—including Chenming, Sun, Shanying, Huatai, Yueyang, Bohui, Wuzhou and Zhongshun Jierou—had net profit of more than 300 million yuan, 3 more than in 2019; together the 10 companies' net profit totalled 9.06 billion yuan, accounting for 69% of total profit, playing a pillar role. Sun Paper ranked first in profit for the second consecutive year, accounting for about 20% of the 10 companies' combined net profit.

Table 1 Overview of the main economic indicators of the papermaking sector in 2020

1.2 Packaging products play an obvious core supporting role and are the industry's most important source of profit

In recent years China's e-commerce business has grown rapidly and the express delivery industry has flourished; together with the implementation of the plastic restriction order, this will be a rare development opportunity for the paper packaging industry. Paper packaging will become an important substitute for plastic for some time to come, and in the coming years leading enterprises in packaging paperboard will gain greater competitive advantages.

This year companies focused on high-strength corrugated base paper, kraft board and white card had the greatest profitability. Green and environmentally friendly products centred on high-grade corrugated cartons, paperboard and cushioning packaging materials for modern transport packaging not only protect goods and facilitate warehousing, loading and transport, but also beautify and promote goods while reducing losses and packaging space. With their superior performance and good processing properties, they have gradually replaced traditional transport packaging containers such as wooden boxes, becoming the main carrier of modern packaging and transport, with considerable room for development. In particular, with the rapid development of modern commerce and the logistics industry, corrugated cartons—whether for transport packaging or sales packaging—have become one of the most widely used packaging containers in modern commerce and trade. Pandemic prevention and control, environmental plastic restrictions and internet logistics have generated a sharp rise in demand for a series of products such as medical prevention and control paper-based materials, single-use food packaging and logistics label paper.

Specialty paper products based mainly on paper-based functional materials—such as the food and medical packaging materials series, the business communication and publishing and printing materials series, the tobacco industry supporting series, the home decoration materials series, and the electrical and industrial paper series—saw significantly improved profitability; household paper is a fast-moving consumer good facing consumers directly, its brand benefits gradually became prominent, and as one of the main epidemic prevention materials it maintained a relatively high level of profitability. Thanks to the state's great attention to spiritual civilization, culture and education and publicity, cultural paper products such as offset paper, copy paper and coated paper enjoyed good market demand and achieved fairly good improvements in profitability.

1.3 Whole-industry-chain safety awareness is growing, with commitment to jointly building a harmonious ecosystem for the industrial internet

Driven by the market and oriented by customer demand, companies are actively adopting the "industry chain integration" development approach and the "packaging integration" service model within the industry. The paper industry is actively transforming towards a whole-industry-chain model, and the "forestry-pulp-paper integration" model has gradually become the main means for the paper industry to upgrade, save energy and integrate the industry, also providing a new way for the paper industry to cope with rising raw material prices and find a development balance point. As integrated packaging service providers, paper products enterprises combine the characteristics of manufacturers, design service providers, procurement service providers and logistics service providers, offering customers packaging products and services from the three aspects of lowering costs, raising efficiency and adding value.

For example, in recent years Shanying Paper has actively laid out its industry chain from a global perspective, and now has a complete industry chain covering waste paper raw material procurement, packaging paper and paperboard production, and carton production and processing; its scale has grown rapidly and it has attracted great attention in the industry. As a typical midstream manufacturing industry, the paper industry shows the industry characteristics of "long chain, asset-heavy, diverse demand"; whoever seizes the high ground in raw materials holds the initiative in the market. Large enterprises such as Chenming, Sun Paper and Bohui, which already have integrated forestry-pulp-paper production models, are expected to retain lower cost advantages and stronger comprehensive competitiveness.

Many companies are committed to "building an ecosystem" for the industry chain; with a more open philosophy, they will jointly build a harmonious ecosystem for the industrial internet and create, share and win together with partners.

1.4 Strengthening lawful and compliant operation and earnestly fulfilling social responsibility

In 2020, the 31 listed companies in the papermaking sector actively improved internal governance and compliance management, and their annual report audit results were all unqualified audit reports—the first time in history. In 2020, 24 companies issued plans to distribute profits, 5 more than the 19 companies in 2019, also a record number, earnestly fulfilling listed companies' commitment to return on investment for shareholders and investors.

All companies adhere to the development philosophy of "circular economy, green manufacturing," strictly comply with national and local environmental protection laws, regulations and related provisions, disclose in detail in their annual reports their compliance with emission standards and specific treatment measures, and carry out sustainable goal plans and actions for ecological green development.

Many companies, especially leading enterprises and those with state-owned backgrounds, earnestly implement the spirit of the "Guiding Opinions of the State Council on the Three-Year Action to Win the Battle against Poverty," and actively deploy their targeted poverty alleviation work in accordance with the "Opinions of the China Securities Regulatory Commission on Giving Play to the Role of the Capital Market in Serving the National Poverty Alleviation Strategy." They respond with practical action to the overall requirements of the national poverty alleviation strategy and make important contributions to the country's achievement, on schedule, of lifting all people out of poverty and building a moderately prosperous society.

In responding to the COVID-19 pandemic, many companies acted quickly, shouldered social responsibility, actively donated money and epidemic prevention materials and took part in prevention and control activities, contributing actively to winning this "people's war" of pandemic prevention and control.

1.5 Innovation-driven development is strengthening, powerfully promoting high-quality development

Continuously improving the capacity for innovation-driven development and the diffusion of technological progress has become an important lever for the sustainable development of the paper industry. Ecological competition is in full swing, and the era of intelligent operation has arrived.

With the development of emerging technologies such as blockchain, artificial intelligence, the Internet of Things, big data and 5G, a great transformation in production methods is certain to come in the future, mainly in artificial intelligence. Companies' R&D work focuses on product structure adjustment and raw material structure adjustment, with R&D investment concentrated on saving total factor costs and organized around a cost leadership strategy. A number of intelligent and automated projects are being advanced to accelerate the pace of building smart factories. Informatization management is being strengthened, with wide application of intelligent management systems such as OA office systems and material requirement planning and requisition systems, providing precise and fast services for corporate functional management and investment decisions and achieving notable results in improving risk control.

The "Digital Xianhe" Industry 4.0 construction vigorously promoted by Xianhe Paper has already made substantive progress; basic management is advancing towards networking, intelligence and collaboration, raising the company's level of intelligent manufacturing. Shanying Paper is pushing forward full-scale digital construction at Shanying; the Yunyin industrial internet platform it has built upholds the concept of "digital creates value, technology empowers the paper industry," deeply serving partner enterprises through digital products for "efficiency improvement at a single plant, collaboration across multiple plants" and building an industry alliance ecosystem. The company took the lead in implementing Industry 4.0 at Shanying Central China, striving to build a modern smart factory, and has achieved smart factories at its Dongguan, Lu'an, Changsha and Chengdu bases; the company also won the honour of the first 2019 China Private Enterprise Excellence in Management Company (BMC) award for its continuous innovation.

Hexing Packaging continues to give play to the key role of the Packaging Supply Chain Platform (PSCP) in integrating the packaging industry, using an asset-light expansion approach and an online-offline interactive model to provide upstream and downstream enterprises and customers in the packaging industry chain with order matching, centralized procurement, industry chain support and information exchange services, integrating the packaging industry chain, optimizing each link, strengthening industrial synergy and building a healthy ecosystem.

Sun Paper upholds the concepts of "revere life," "revere the environment" and "revere quality," using the most innovative technologies to achieve green, safe and efficient recycling of resources, making the foundation of the company's development even firmer. At the end of 2020, the project "Key Technologies for Clean Preparation of High-Purity Biomass Cellulose and Industrialization" won the China Industrial Award Commendation Award, the only papermaking enterprise project among the winners.

1.6 Government subsidies hit a record high; self-improvement is the foundation of development

In 2020, deeply affected by COVID-19, and with the national economy's shift away from the real economy becoming prominent in recent years, Sino-US trade tensions gradually intensifying and the risk of rising global trade protectionism increasing sharply, the industrial manufacturing real economy was severely hit, and local governments rushed to support backbone enterprises in their regions. In 2020 all listed companies received various government subsidies totalling 1.889 billion yuan, more than the 1.795 billion yuan of 2019, the highest level ever.

Eight companies—Chenming, Dashengda, Shanying, Yibin, Huatai, Sun, Yueyang and Hexing—received more than 40 million yuan in government subsidies, and their subsidies together accounted for 70% of the total, indicating the government's strong expectation that backbone enterprises will support stable economic development. But government subsidies are only an unconventional, temporary relief measure under the enormous impact on the real economy of overall slowing economic growth or a complex international environment, and should not become a source of dependence or a stabilizer for enterprise development. Therefore enterprises must cultivate themselves and grow strong, improving the profitability of their core business, so as to have a continuous blood supply and survive under the law of the jungle.

1.7 Capital is severely immobilized, and liquidity uncertainty risk is high

In 2020 national environmental protection policies became stricter, accelerating the process of phasing out outdated capacity and prompting many small enterprises to stop production; capacity concentration kept rising and industry prosperity improved. While improving the overall efficiency of the paper industry, this also greatly stimulated enterprises' desire for technical transformation or capacity expansion, especially for packaging paperboard products; driven by good development space for paper packaging and continuously rapid growth in e-commerce express delivery demand, many enterprises' investment appetite increased, the risk of supply-demand imbalance rose sharply, and sharp market fluctuations driven by price competition recur in cycles—this should arouse sufficient vigilance.

Operational risk is mainly reflected in increased uncertainty of capital liquidity and increasingly severe immobilization of capital: the 31 listed paper companies' funds tied up in accounts receivable, notes receivable, receivables financing, inventory and construction in progress amounted to as high as 79.6 billion yuan, a new record high. For this reason each enterprise must always guard against capital risk, promptly improve risk warning and countermeasure mechanisms, dynamically investigate potential risks in capital flows and resolve such risks in good time. For example, in recent years some backbone enterprises have successively set up finance companies to optimize capital management, achieving good results.

This year the scale of receivables financing surged sharply: among the 31 listed paper companies, 26 companies increased their working capital through accounts receivable by a total of about 8.1 billion yuan, improving capital turnover speed and strengthening financial coordination capabilities.

1. A preliminary exploration of development prospects in 2021

According to the newly published "Outline of the 14th Five-Year Plan and the Long-Range Objectives Through 2035," it is proposed to carry out transformation and upgrading of paper industry enterprises and improve the green manufacturing system. 2021 is the historical convergence period for China to achieve the Two Centenary Goals and the opening year of the 14th Five-Year Plan. The paper industry needs to unswervingly implement the development philosophy of "innovation, coordination, green, openness and sharing" put forward by the Central Committee. Driven jointly by factors such as upgrading social demand, tightening environmental protection policies, continuous technological progress and changes in resource supply, low-end capacity is being phased out at an accelerated pace, industry concentration keeps rising and the industry structure keeps improving. Supply-side reform and raw material structure adjustment will further raise industry prosperity, and under the waste import ban the overseas layouts of leading enterprises are forging new advantages.

To further reduce plastic pollution and protect the ecological environment, in January 2020 the National Development and Reform Commission and the Ministry of Ecology and Environment issued the "Opinions on Further Strengthening the Treatment of Plastic Pollution," setting out comprehensive provisions on the scope of plastic restrictions, phased goals, and the choice of alternative products and other aspects. The introduction of the new plastic restriction order demonstrates China's determination and strength in building an ecological civilization in an all-round way and developing the national economy; non-degradable plastic packaging and plastic products will gradually withdraw from the market, and paper packaging products and biodegradable plastic products will become two powerful tools for solving plastic pollution.

Under the influence of the state's ban on waste paper imports and policies further restricting non-degradable plastic products, the paper industry faces new opportunities and challenges. As an important raw material industry, the paper industry has a high degree of dependence on external sources for pulp raw materials, which has always been the biggest bottleneck constraining the development of China's paper industry. Zero waste paper imports starting in 2021 has further increased the difficulty of supplying fiber raw materials; to make up for the fiber shortage after the waste ban, the paper industry is adjusting its raw material structure by importing commercial recycled fiber pulp, increasing imports of wood pulp and wood chips, and building new wood pulp projects domestically. The "waste import ban" combined with the "plastic restriction order" has sharply increased demand for pulp; using diversified market tools externally to play a "combined punch" and improve the international voice in raw materials, and accelerating industry chain construction internally while improving the raw material self-sufficiency rate and guaranteeing supply security, will be an important subject for the industry's future development.

The report of the 19th National Congress of the Party proposed accelerating reform of the ecological civilization system and building a beautiful China, once again establishing the "two mountains" theory that "lucid waters and lush mountains are invaluable assets," and listing the building of an ecological civilization as a fundamental plan for the sustainable development of the Chinese nation; the implementation of the national ecological construction plan will guide the paper industry onto a fast track of green and environmentally friendly development. On September 22, 2020, at the general debate of the 75th session of the United Nations General Assembly, President Xi Jinping solemnly promised the world that China will increase its nationally determined contributions, adopt more vigorous policies and measures, strive to peak carbon dioxide emissions before 2030, and strive to achieve carbon neutrality before 2060.

President Xi's speech pointed out the long-term development goal for the paper industry. Given that the paper industry has notable recyclable development characteristics, it will continue to vigorously implement the innovation-driven development strategy, accelerate the conversion of old and new growth drivers, lead transformation and upgrading with green ecology, give full play to its whole-industry-chain advantages, build an industrial ecosystem, draw on industry alliance sharing platforms, and persist in pursuing high-quality, sustainable, green and low-carbon development, providing customers with greener, higher-quality products and services.

The World Bank's "Global Economic Prospects" report points out that if COVID-19 vaccinations can be rolled out on a large scale in 2021, the global economy is expected to grow by 4% in 2021. Among this, China's GDP is expected to grow 7.9% in 2021, after growing 2.3% in 2020. The foreseeable continued recovery of the global economy will help the paper industry maintain an overall stable and sound development trend in 2021.

——This article is reprinted from China Packaging Network (pack.cn). Original link: http://news.pack.cn/show-378451.html