Paper industry value analysis

Paper industry is a typical cyclical industry, supply and demand determine paper prices and profits. Its downstream is mainly the consumer goods industry, the cyclical demand is weak, but due to the lag of production capacity supply 1-1.5 years, the mismatch between production capacity and demand leads to cyclical fluctuations in paper prices and paper enterprise profits. At the same time, the inventory cycle also has an impact on paper prices and the short and medium term profits of paper companies, and the inventory cycle center is about half a year. In addition, due to the high import dependence of pulp, paper prices are driven by raw material import costs.

Fundamentals: 1) Waste paper system: affected by the decline in global demand, exports of some downstream industries are under pressure, but the import quota of foreign waste is shrinking, the supply of raw materials is tightening, the price difference between domestic waste and foreign waste is expanding, and the leading company has the thickening pad of income. 2) Wood pulp system: pulp price is low, demand is expected to be stable, which is conducive to the profit repair of paper enterprises. It is expected that the prosperity of each subdivision paper species of wood pulp system is better than that of waste paper system as a whole in the future, and the prosperity of wood pulp system is sorted as follows: coated paper > household paper > white cardboard > double adhesive paper. 3) The finished products of household paper are no longer used as intermediate raw materials in other links, and are directly oriented to consumers. Daily necessities refer to all kinds of sanitary products used to take care of individuals at home and travel, including sanitary paper (toilet paper, napkins, facial tissues, kitchen paper, etc.), diapers and sanitary napkins. Toilet paper has the characteristics of strong water absorption, less bacteria, soft paper, uniform thickness, more complex in the process, and a certain barrier to entry in technology. And mainly for C-side customers, the industry added value and profit margins are relatively high.

3.3 Competition Analysis

Waste paper system: The demand of some downstream industries is under pressure, and the leader enjoys a profit advantage. Wrapping paper has been the biggest impact of the epidemic, and the epidemic has accelerated the industry reshuffle. In recent years, the price increase of corrugated cardboard is mainly driven by the supply contraction and the price increase of raw materials. From the perspective of ton paper profit, the gross profit margin of box board corrugated paper fell to a lower level. Box board corrugated paper demand growth is less than the capacity growth, the supply is still excess. The raw material side strictly controls the import trend of foreign waste, and the import quota is concentrated in the leading. The imbalance between domestic waste supply and demand has intensified, the price difference between domestic waste and foreign waste has widened, and the dragon head has the thickening pad of income.

Wood pulp system: low pulp price shock, conducive to the profit repair of paper enterprises. Wood pulp: the low price of pulp oscillates, which is conducive to the improvement of the gross profit margin of paper enterprises. Coated paper: The demand remains stable, and the gross profit margin is high. Double adhesive paper: The price remains high, the profit continues to repair. White cardboard: industry profitability repair, prosperity recovery.

Household paper cost transfer ability is strong, profitability is better and more stable. From the perspective of horizontal comparison of the climate of each fine molecule industry in the paper industry, we think that the wood pulp system is better than the waste paper system as a whole, and the order of the wood pulp system is: coated paper > household paper > white cardboard > double adhesive paper; However, the leading waste paper companies will still have higher profitability due to the enjoyment of waste paper quota dividends.

The overall capacity of the paper industry is excess, and the paper classification reflects the characteristics of structural excess. From the supply side, the growth of industry supply is limited, and the concentration is gradually rising. In recent years, limited by the lack of waste paper import quota, domestic waste paper recycling network and raw material control ability such as "forest pulp and paper integration", small-scale production capacity actively withdrew. Under the gradual increase of environmental protection policies, backward production capacity in the industry has been forced to withdraw. In addition, the requirements of environmental protection, technology and capital have led to a generally high barrier to entry for the industry. Under the influence of many factors, the industry supply growth is limited, and the industry concentration continues to rise. From the demand side, there are significant differences in the downstream demand growth of each paper species, and the overcapacity of the paper industry is reflected in the characteristics of structural excess. The excess capacity pressure of packaging paper represented by box board paper and corrugated paper is relatively not significant; Due to the rigidity of downstream demand, the overall supply and demand pattern of household paper is relatively stable; The demand for cultural paper has downward pressure, and excess capacity is more significant.