Under the direction of the hottest paper industry

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Paper industry: the policy points out the direction (Part 2)

5.1 investment strategy

the growth rate of the paper industry is closely related to the development of the national economy. At present, China's economy is developing at a high speed, and the consumption of paper products will also increase significantly with the rapid growth of China's GDP in addition to the role of adding graphene alone. Although the macro policies put forward higher requirements for the environmental protection of China's paper industry and increased the production cost of the industry, the integration of forestry and paper has enhanced the control of raw materials of China's paper industry and helped to reduce production costs. At the same time, the market trend of most paper products is good. We believe that as the price of raw materials tends to stabilize, the market situation of most paper products is good, and the paper industry will gradually enter the boom cycle, giving the paper industry the investment rating of the same market

investment strategy in the paper industry:

1. According to the characteristics of the industry, the performance growth of paper enterprises is closely related to their capacity expansion, so the companies with large capacity expansion in 2008 deserve our close attention, except for the establishment of new material R & D centers such as Meili Paper and Jingxing paper; 2. Raw material control is one of the most important factors affecting the profitability of enterprises, so companies with forest paper integration projects are still our focus, especially companies with their own fast-growing forests that have entered the rotation period, such as Yueyang paper, Huatai and Meili Paper; 3. We also need to pay attention to companies with good product market conditions. Based on the analysis of the previous sub industries, companies that produce cultural paper and white cardboard deserve our attention. For example, the strain rate conditioning range (/s) of silver 19 experiment is 0 0067 pigeon investment, sun paper, etc; 4. As the paper industry is in the integration stage, the industrial policy also gives more support to the leading enterprises, encouraging them to carry out mergers and acquisitions to improve the industrial concentration, so the leading enterprises deserve our attention, such as Huatai Co., Ltd. and Chenming paper

5.2 comparison of relative valuation

at present, the P/E ratio of papermaking enterprises in Hong Kong market in 2008 is about times, which is much higher than the average p/E ratio of papermaking enterprises in China's A-share market of 20 times. The main reason is that papermaking enterprises in Hong Kong market (such as nine dragons and Liwen) have strong control over raw materials. Nine Dragons' brother Tiannan company is the largest American waste recycler, and Liwen also has mature European waste recycling channels, This has greatly reduced their production costs and enhanced their profitability. At present, the biggest gap between the paper-making enterprises in the domestic A-share market and them lies in the control of raw materials. However, with the deepening of the forest paper integration project of domestic paper-making enterprises, this gap will gradually narrow, and the valuation of paper-making enterprises in China's A-share market will gradually keep up with that of Hong Kong market

6. Industry risk tips

the Eleventh Five Year Plan for national economic and social development and the development policy of the paper industry have put forward environmental protection requirements for the paper industry. The government will further strengthen the environmental protection administrative monitoring of the paper industry. Environmental protection will become an important factor affecting the development of the paper industry. The improvement of environmental protection requirements will increase the production cost of the whole industry and reduce the gross profit margin of the industry

although the price of wood pulp is expected to fall in the long term, it will still run at a high level in the short term, and the price of waste paper will continue to rise. This will increase the production cost of paper enterprises and reduce their profitability

in 2007, the growth rate of fixed asset investment in the paper industry increased significantly. In the future, the centralized release of production capacity will have an impact on the domestic paper market

both China's paper and coated paper need to rely on exports to alleviate the oversupply in the domestic market. Once they are frequently sanctioned by foreign trade protectionism, it will have a great impact on the domestic market

7. Key listed companies

we believe that the following companies deserve our attention, including Huatai shares, Meili Paper, Yinge investment and sun paper

Huatai Co., Ltd.: driven by two wheels of papermaking and chemical industry, the company has a bright development prospect

investment rating: short-term purchase and long-term purchase

key points of investment:

the company is the largest paper manufacturer in China and Asia, and has obvious advantages in terms of cost. The domestic paper industry is in the period of integration, which gives a better development opportunity to industry leaders like Huatai. By seizing the market share after the withdrawal of small enterprises, the company will quickly become bigger and stronger

actively develop the forest pulp paper integration project, and now it has a 600000 Mu broad-leaved forest pulp project in Dongying and a 2400000 Mu coniferous forest pulp project in Anqing. With the deepening of the two projects, the company will reduce its dependence on imported raw materials, reduce its production costs and improve its gross profit margin. Next year, 100000 mu of Dongying's own fast-growing forest can be rotated, and the profit is expected to reach 280million yuan

in May 2007, the company decided to establish Huatai Co., Ltd. in the United States with Kaufman group, with Huatai holding 51%. The subsidiary is mainly engaged in the collection, purchase, sales, export and disposal of waste paper and other business activities related to the above, as well as the sales and distribution of China Huatai products. The establishment of the subsidiary will expand the company's waste paper supply channels, thereby enhancing the company's raw material control

the company and Stora Enso, Finland jointly build a 200000 t/a SC paper project, which can reach the production capacity in 2008. It is expected to turn to high-grade cultural paper base paper; The company's Xinhui phase I 400000 ton paper project will be officially put into operation in 2009, and the company's production layout will be more perfect

with the injection of high-quality chemical assets, its annual net profit will reach about 160million yuan, becoming a new profit growth point of the company. In addition, the company plans to add a 500000 ton ionic membrane caustic soda project, which will be put into operation in 2008 and 2009. The largest underground salt mine in China has been found in Dongying City, Shandong Province, where Huatai is located, and its salt production cost is far lower than the average market cost. From this point of view, the company has a comparative advantage in producing salt chemical products, and the new project is expected to significantly increase the company's future performance

it is estimated that the EPS of the company in 2007 and 2008 will be 1.03 yuan and 1.35 yuan respectively. Referring to the closing price of 22.77 yuan on November 12, the corresponding dynamic PE will be 22.11 times and 16.38 times respectively. Give the company an investment rating of short-term purchase and long-term purchase

risk factors: 1. At present, the company is still highly dependent on American waste, and the high price of American waste has a certain impact on the company's production cost, thus affecting the company's gross profit margin; 2. The substantial growth of the company's main product paper export may lead to foreign anti-dumping sanctions; 3. Although the company's leading product paper has great market potential in the long run, and the price shows signs of rebound, its market price and gross profit margin are still hovering at the bottom

Meili Paper: new projects improve the company's performance, and asset injection expectations still exist

investment rating: short-term purchase, long-term purchase

key investment points:

the company is the largest paper-making company in Western China, and its main products are cultural paper and box board paper. The cultural paper market tends to be good. The state has paid close attention to the energy conservation and emission reduction policy. A large number of small cultural paper mills have closed down and the supply of cultural paper has decreased. As a leading papermaking enterprise in Northwest China, the company's cultural paper sales revenue and gross profit margin are expected to increase significantly next year

new projects are expected to increase the company's performance. The capital increase of the group will help the enterprise solve the current capital shortage and ensure that the first phase of the forest paper integration project (mainly the 250000 ton white cardboard production line) will be put into operation smoothly at the end of 2007. We believe that the white cardboard market is in good condition in 2008, and the project is expected to greatly improve the company's performance

in addition, part of the company's 500000 Mu fast-growing forest entered the rotation cutting period in 2007, of which 310000 Mu is the company's own forest land, and the other 190000 Mu is the forest land in cooperation with farmers. In the current form of substantial increase in forest prices, the company's forest assets will enhance the company's value

in 2006, MCC group became the master of Meili group, which established the company as the core platform of MCC's paper business and prepared the company to uniformly manage the group's numerous paper pulp businesses. In the last private placement of the company, MCC Meili took the 200000 tons of chemical mechanical pulp project as the carrier, aiming to strengthen its controlling interest in the company (the current holding ratio is only 26.54%), and expand and strengthen the papermaking and pulping business with the company as the core. Based on this judgment, we do not rule out the possibility of asset injection in 2008. If MCC group reorganizes three pulp and paper enterprises in Laishan, Sichuan, Qiandongnan, Guizhou and Xianghe, Hebei into the company, the company will have a production capacity of 2million tons of pulp and paper, and the company's profitability will be greatly improved

we expect that the EPS of Meili Paper in 2007 and 2008 will be 0.31 yuan and 0.82 yuan respectively. Referring to the closing price of 13.71 yuan on November 12, the corresponding dynamic P/E ratios in 2007 and 2008 will be 44.23 times and 16.72 times. Maintain the investment rating of short-term purchase and long-term purchase of the company

risk factors: 1. The high price of raw materials will weaken the profitability of the company; 2. Whether the forestry paper integration project of the company can be completed as scheduled, especially whether the white cardboard project can be successfully put into operation and its profitability will have a great impact on the future performance of the company; 3. The time for MCC to integrate its pulp assets cannot be determined

Silver Pigeon Investment: new projects improve the company's performance, and salt chemical industry promotes future development

investment rating: short-term shareholding increase and long-term purchase

key investment points:

the company is one of the leading enterprises of cultural paper, and its main products are cultural paper, box board paper and special paper. The company's culture paper continues to implement the famous brand strategy, and has established good cooperative relations with many well-known domestic publishers such as the people's education press; The good cost performance of the company's packaging paper has been recognized by the market, and has established fixed cooperative relations with Shuanghui group, Haier Group, Wuliangye (35.56, -0.24, -0.67%, entering the bar) group, Mengniu Group and other famous domestic groups

the company started technical cooperation with Marubeni in 2005. The cooperation with Marubeni will help to improve the technical level of the company and smoothly enter the field of special paper. 20000 tons of special paper was put into production at the end of 2007, and 150000 tons of high-strength corrugated paper was put into production in the middle of 2008. The production of cultural paper produced by Luzhou Yinge bamboo pulp Co., Ltd. was expanded to 150000 tons in 2008 and 250000 tons in 2009 for rail transit and high-end electronic equipment. The commissioning of these new projects will greatly improve the company's performance

in terms of straw pulp, the government currently restricts the production and use of straw pulp, and straw pulp and paper enterprises with less than 30000 tons will be completely banned. The company has certain advantages in the pulping technology of straw pulp. Next year, the decline of domestic wheat straw price and the rise of straw pulp price will greatly improve the gross profit margin and profitability of the company. Meanwhile, the shortage of cultural paper in 2008 will further increase the company's performance

silver dove investment signed a framework agreement on salt chemical projects with Yongmei Group and Wuyang county government to jointly develop Wuyang salt mine resources, carry out salt deep processing projects and build a new salt chemical industry base. The total investment of the project will reach 3billion yuan. The company and Yongcheng Coal Power Holding Group Co., Ltd. jointly increased the capital and shares of Wuyang Yinge Shuangli Industrial Co., Ltd., of which Yongcheng Coal Group accounted for 60% and the company 40%. The launch and promotion of the project will provide the company with relatively cheap chemical raw materials for papermaking in the future, reduce the company's production costs and improve the company's

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