Анализ современного состояния и тенденций развития упаковочной промышленности

At present, China's packaging industry has formed an independent, complete and full-category industrial system with paper packaging, plastic packaging, metal packaging, glass packaging, packaging printing and packaging machinery as its main products. The rapid development of China's packaging industry has not only basically met the needs of domestic consumption and commodity exports, but also played an important role in protecting goods, facilitating logistics, promoting sales and serving consumption.

Affected by the slowdown in downstream consumption growth, the revenue of key packaging companies rose slightly in 2022H1. Revenue grew 3.8% year on year in 2022H1, while the single quarter of 2022Q2 fell -4.2% year on year. The slowdown was mainly due to: total retail sales of consumer goods grew 8.4% year on year in 2022H1, among which typical downstream sectors of listed packaging companies, such as tobacco and liquor retail sales, fell 1.7% year on year, soft drink output grew only 3.3%, and mobile phone shipments fell 5.1% year on year, all of which had a certain impact on manufacturers of corrugated linerboard packaging, color boxes, cigarette labels and plastic packaging; revenue of paper packaging, cigarette label, metal packaging and plastic packaging companies grew 4.3%, 8.0%, 2.5% and 1.5% year on year in 2022H1. On the other hand, the pricing of some products followed the decline in raw material prices, which also slowed revenue growth (such as corrugated linerboard packaging).

Leaders continue to drive industry consolidation with obvious competitive advantages: in previous years, against the backdrop of tightening environmental protection policies and rising labor and raw material costs, the pace of industry M&A and consolidation accelerated, driving a marked improvement in the bargaining power of leading companies along the industrial chain. Sub-sectors such as metal, plastic and paper packaging all benefited from the rising concentration of downstream customers, and orders continued to concentrate toward packaging leaders. On the other hand, through high-quality services and nationwide coverage, leaders consolidated the stickiness of existing customers, while also accelerating the layout of new markets and continuously expanding market share.

Building comprehensive packaging service providers, expanding new businesses and enhancing the added value of products and services: downstream customers' products are becoming increasingly diversified, raising their demand for packaging and their preference for packaging leaders with comprehensive service capabilities. Through acquisitions and technology R&D, packaging companies continuously extend the depth of the industrial chain, for example by crossing into social packaging, smart packaging IoT, and one-stop design and development services.

Slower growth in total retail sales of consumer goods in 2022H1

Slower growth in beverage output in 2022H1

Against the backdrop of a generally off-season utilization rate in the first half of the year, profitability still improved.

1. From a macro perspective, the CPI-PPI scissors gap widened. PPI represents raw material prices, while CPI represents product prices. The difference between PPI and CPI peaked in 2018Q2 (4.7% and 1.9% respectively), then reversed rapidly, and continued to widen until July 2019 (-0.3% and 2.8% respectively), which is fairly consistent with the trend of packaging companies' gross margins from low to high. Considering the raw material inventory factor, profitability is expected to continue to improve in subsequent quarters.
2. Bargaining power drives profitability: as the industry consolidates and the market share and bargaining power of leaders rise, the expansion of profitability drives gross margin improvement (most notable in the metal two-piece can industry and the corrugated linerboard paper packaging industry).

The gap between PPI and CPI widened in 2022Q2

Paper packaging: the gross margins of key companies (Jinjia Group, Yuto Technology, Hexing Packaging and Meiyingsen) improved considerably year on year in 2019Q2, up about 2.1pct year on year. The improvement in profitability was due to:

1. Falling raw material prices: prices of various paper grades were high in 2018Q2 and fell markedly year on year in 2019Q2 (coated art paper, offset paper, ivory board, white board and linerboard down 19%, 14%, 13%, 12% and 20% year on year). Considering the raw material inventory cycle, industry profitability is expected to continue to improve quarter on quarter in 2022Q3.
2. Greater say in industry consolidation: the paper packaging industry continues to consolidate. For example, orders of Hexing Packaging, a leader in linerboard and corrugated paper, kept growing against the trend, and industry consolidation pushed the industry's profitability to bottom out and rebound.
3. Enhancing value chain added value: providing high value-added services to brand owners using paper packaging as a carrier to improve overall gross margins. For example, Jihong Group uses packaging as a carrier to expand across borders into precision marketing and cross-border e-commerce, achieving deep integration of online advertising and offline packaging businesses.

Metal packaging: the arithmetic average gross margin of key companies (ORG Technology, CPMC Holdings (0906.HK), Baosteel Packaging and Shengxing Group) was 17.8% in 2019H1, up 0.7pct year on year. The improvement in profitability was due to:

1. The two-piece can industry returned to an upward track. After excessive capacity deployment, the two-piece can industry suffered consecutive losses in 2016-2017, while consolidation among leaders intensified (including ORG Technology taking a stake in CPMC Holdings and acquiring Ball Asia Pacific, and Shengxing acquiring Pacific Can, etc.). At present, the CR4 market share has reached as high as 70%, bargaining power has improved markedly, and the industry has entered an upward profit track. In early 2019, two-piece cans successfully raised prices by 0.7-0.8 fen/can, and the two-piece can business gross margins of ORG Technology, Baosteel Packaging and CPMC Holdings rose 6.5pct, 2.2pct and 0.2pct year on year in 2022H1. 2) Raw material prices declined slightly. In 2022H1, aluminum ingot prices fell 4% year on year, and overseas LME aluminum spot prices fell 17% year on year, driving up the gross margin of the two-piece can industry.

Changes in paper packaging profitability and raw material price trends

Two-piece can price increases drive the recovery of two-piece can gross margins

Future development trends of China's packaging industry: green, low-carbon and environmental protection become the main theme of development

1. The regional landscape will gradually change

The packaging industry landscape, with the "Yangtze River Delta", "Pearl River Delta" and "Bohai Rim" as key regions, will not change quickly for a considerable period of time and will still develop in step with the regional economy. However, with the large-scale development of the western region and the revitalization of the old industrial bases in Northeast China, the overall imbalance in the development of the packaging industry will change markedly. This is an opportunity for expansion and development for outstanding packaging companies in the "three major regions".

1. Developing toward integration and systematicness

Developing toward integration and systematicness. Traditional systematic packaging solutions, such as buying packaging materials and getting machines for free, no longer work as the market matures. Suppliers that cannot provide complete solutions will have their bargaining power with customers weakened because they cannot systematically reduce packaging costs, and packaging companies need integrated and systematic packaging approaches.

1. Structural adjustment will accelerate

With changes in the domestic and international development environment and the combined impact of quality-related and structural contradictions across the economy, China's packaging industry will enter a critical development period, that is, a transition from a golden period of development to a period of frequent problems. Long-standing structural and quality-related defects, such as overcapacity, excessive reliance on energy and resource consumption, weak independent innovation capability, insufficient corporate competitiveness, and an industrial scale out of proportion to economic benefits, will become more and more obvious, which will make regional industrial restructuring unavoidable in the next few years. Structural adjustment is a process of survival of the fittest, a process of optimization and reorganization, and also an opportunity for advantageous companies to take off.

1. "Green, low-carbon and environmental protection" will be the main theme of the packaging industry's future development

With the introduction of the implementation plan for promoting green packaging in the express delivery industry, implementation plans that restrict the use of a series of non-degradable plastic packaging have been rolled out first in industries such as e-commerce, express delivery and food delivery, and local governments, especially cities, are urged to step up implementation.

——This article is reprinted from China Packaging Network (pack.cn). Original link: http://news.pack.cn/show-379430.html