Paper packaging industry: the prosperity of packaging paper continues to rise in 2020

Most of the price of paper stocks rose slightly last week, and the prices of wood pulp and waste paper rose by a large margin last week. It is worth noting that the rising paper types began to differentiate. The price of coated paper, which has risen rapidly in the second quarter of 2009, has slowed down, while the price of packaging paper (box/corrugated paper, white cardboard, white cardboard, etc.) has increased. In particular, the price of boxboard/corrugated paper rose by 7-9% month-on-month, and the monthly increase was larger.

We believe that in 2010, as exports continue to grow and domestic consumption continues to prosper, the demand for the packaging paper industry will return to more than 10%. On the supply side, due to the 2008-2009 financial crisis hitting the packaging paper industry, most manufacturers have postponed the expansion plan at that time. The release of new capacity is also going to be at the end of 2010. It is expected that the capacity growth will be within 5% in 2010. . We believe that the packaging paper industry in 2010 will be in short supply, and optimistic about the papermaking enterprises that mainly carry packaging paper.

H-shares for packaging paper mainly include Nine Dragons Paper, Lee & Man Paper, Sunshine Paper and Chenming Paper (20% capacity is packaging paper). The profitability of Nine Dragons Paper and Lee & Man Paper has recovered to a historically good level. According to our 2010 fiscal year earnings estimates, PE valuations are 21x and 18x respectively. We believe that the current profitability of the two companies will be maintained in 2010 and investors can continue to hold them. Sunshine Paper's production in 2011 increased by 100%, and earnings are expected to achieve substantial growth. In 2011, PE was only 4.8x. Chenming Paper's pulp and paper production capacity increased by more than 50% in 2011. In 2010 and 2011, PE was only 7.9x and 6.6x. We believe that Chenming Paper and Sunshine Paper have medium and long-term investment value.

Among the A-share companies covered by us, the paper-making enterprises include Sun Paper (white cardboard accounts for 31% of paper production capacity), Bohui Paper (package paper accounts for 73% of paper production capacity), and Chenming Paper (package paper accounts for Paper production capacity is 20%). Among the enterprises that we have not officially covered, Jingxing Paper, Shanying Paper and Yinge Investment also focus on packaging paper. In 2008, they experienced a loss. In 2009, they made a small profit. In 2010, the performance was highly flexible and worthy of attention. .