Paper industry value analysis

Chapter I industry overview

Papermaking is one of the four great inventions of China, and the annual production and sales volume of China's paper industry rank first in the world, accounting for about a quarter of the global total. From the Western Han Dynasty to today, it still brings great convenience to the global civilization transmission and life and work. Papermaking is an important invention of the ancient Han working people. There are two forms: mechanical and manual. The mechanism is carried out continuously on the paper machine, the pulp suitable for the quality of the paper is diluted with water to a certain concentration, and the network part of the paper machine is initially dehydrated, forming a wet paper page, and then dehydrated by pressing, and then dried into paper.

As can be seen from the above chart, the proportion of paper industry revenue in GDP is declining, which is a declining industry, the number of enterprises is decreasing, mergers and acquisitions are increasing and some enterprises are withdrawing from the paper industry.

The paper industry can be divided into pulp, machine paper and board, processed paper and paper products in general. Due to different classifications, there are occasional crossovers in the subdivisions. Different from handmade paper; Paper and board made on various types of paper machines. It can be subdivided into printing paper and paperboard, writing, drawing and reproducing paper and paperboard, packaging paper and paperboard, living, sanitary and decorative paper and paperboard, technical paper and paperboard, processing paper base paper.

Chapter two: Business model and income model

The raw material of papermaking is mainly pulp. According to the different raw materials, papermaking in the middle reaches can be divided into "wood pulp system" paper species with wood pulp as raw material and "waste paper system" paper species with waste pulp as raw material. "Waste paper" paper types mainly include box board paper, corrugated paper, the downstream of the industrial chain is mainly paper packaging products; "Wood pulp" paper types include cultural paper, household paper and white cardboard.

The paper industry is an important midstream industry, the upstream carries agriculture, forestry and pulp and paper, and the downstream connects packaging and printing and related consumer industries. The upstream raw materials are mainly pulp and waste paper, and the consumer industry in the downstream industry has a large demand.

Industry driving force: As a traditional manufacturing industry with wide downstream demand, the paper industry mainly analyzes industry dynamics based on supply and demand, price, output, consumption, capacity, inventory, etc.

Demand: The paper industry involves a wide range of downstream industries, including packaging, printing, consumer industries, etc. The prosperity of the downstream industry directly affects the demand of the paper industry, and then affects the supply and demand relationship of the industry, resulting in changes in price and output.

Supply: To determine whether the new production capacity of the industry is actually decreasing, the core comes from the national environmental protection policy and the administrative regulation of capacity reduction, and from the automatic contraction of industry profits.

Inventory: Under the current pattern of stable economic expectations, the volatility of the paper industry is gradually converging, and after the increasingly heavy capital cost pressure is superimposed, the volatility of the inventory has also begun to be gradually compressed and narrowed.

Cyclical: The paper industry is an atypical cyclical industry, and the industry prosperity is closely related to national policies and last year's sales demand, and the periodicity is not very obvious.

Chapter III Industry valuation and global leading enterprises

3.1 Industry comprehensive financial analysis

3.2 Development and price driving mechanism

The paper industry is characterized by a high dependence on the international market for upstream pulp: due to the relative lack of domestic forest resources, more than 50% of pulp is imported. Raw wood pulp is affected by the global economic boom and supply and demand, the price is global pricing, domestic enterprises do not have a strong influence on the price, belong to the price taker. The raw material cost accounts for a high proportion of the total product cost, about 70%. Occupying the upstream can increase cost control and raw material control, which shows that the paper industry is also a cyclical industry.

The paper industry is a highly polluting industry with high environmental protection requirements, policy barriers to entry, and high capital and technical requirements for capacity expansion → Scale is the most important competitive advantage. Generally, the first and second quarters are off-season, and the third and fourth quarters are better, and the performance is low before and high after.

The upstream cycle of the industry is long, and the capacity supply is easy to predict: the maturity of the forest takes more than 5 years; It takes 1-2 years to put in large equipment and supporting capacity for pulp production. In addition to individual segments, the overall growth rate of downstream demand has slowed down: China's economy has entered the "new normal" and the overall growth rate of downstream demand has slowed down. However, it is also necessary to look at the classification, the demand for household paper and corrugated cardboard continued to grow steadily, while newsprint and printed writing paper fell sharply.