Paper making sector is growing in China

Paper sector was growing slightly higher during the trading period on 15th. Jan. ,with Bohui Paper up more than 8%, Jingxing Paper up more than 5%, and other paper-making companies like Huatai Holdings, Min Feng Special Paper, Chenming Paper, Rongsheng Environmental Protection, Sun Paper are all going upward.

In 2020, the number of the import license of the first batch of waste paper is greatly reduced, making the paper industry once again in the situation of shortage of raw materials. Some brokers predict that the total volume of foreign waste imports will decrease by 50% in 2020, and they are estimated conservatively that the annual gap is close to 10 million tons, accounting for 15% of the total demand. The gap is so large, the expectations on price rising are strong.

The shortage of raw materials and low inventory are the main logic behind the widespread belief that paper prices will enter a new round of rising cycle, the Shanghai Securities News reported. Since January, a number of listed paper companies issued price increase letters, such as Chenming Paper and Yueyang Forest Paper have generally increase the price of 100 yuan/ton to the cultural paper products , and the Sun Paper lifted the offset paper prices of 100 yuan/ton, which the new price implementation period is set on February 1.

According to the reporter's statistics, among the A-share paper sector, the paper prices in Chenming Paper, Huatai Holdings, Jingxing Paper, Qifeng New Material, Yueyang Forest Paper are felled below the net asset value; While the Price-to-Book Ratio (PBR) of Hengfeng Paper, Shanying Paper, Qingshan Paper and Minfeng Special Paper is less than 1.5. Even Bohui Paper, which has been repeatedly listed by industrial capital, has a PBR of only 1.63.

At present, the lowest PBR is Huatai Holdings with only 0.68. The company is the largest newsprint production base in China, with a market share of more than 30%. The company is also the one with the highest proportion of foreign waste quota in the first batch in 2020, which has the advantage of low-cost operation.

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