The paper packaging industry has a strong demand, and enterprises have expanded production to seize the market
With the implementation of the “plastic restriction order” and other policies, the paper packaging industry has a strong demand, and the paper packaging manufacturers are raising funds through the capital market to expand production capacity. Paper box
Recently, China’s paper packaging leader Dashengda (603687. SH) received feedback from the CSRC. Dashengda plans to raise no more than 650 million yuan this time to invest in projects such as the intelligent R&D and production base of pulp molded environment-friendly tableware. Not only that, the reporter of China Business News also noticed that since this year, many paper packaging industry companies are rushing to IPO to complete the capacity expansion strategy with the help of the capital market. On July 12, Fujian Nanwang Environmental Protection Technology Co., Ltd. (hereinafter referred to as “Nanwang Technology”) submitted the application draft of the prospectus for the initial public offering of shares on the GEM. This time, it plans to raise 627 million yuan, mainly for paper product packaging projects. paper bag
In an interview with reporters, Dashengda people said that in recent years, the implementation of “plastic restriction order” and other policies has increased the demand of the entire paper packaging industry. At the same time, as a leading enterprise in the industry, the company has strong comprehensive strength, and the expansion and improvement of profits are in line with the company’s long-term development strategic objectives.
Qiu Chenyang, a researcher of China Research Puhua, told reporters that the industry has been increasing production capacity, which shows that enterprises have very optimistic expectations for the future of the market. Whether it is the rapid development of the national economy, the export of products, the development of e-commerce in the future, or the implementation of the “plastic restriction order” policy, it will provide huge market demand. Based on this, the leading enterprises in the industry will increase their market share, maintain market competitiveness and achieve economies of scale by increasing the scale of investment.
Policies stimulate market demand gift box
According to the public information, Dashengda is mainly engaged in the research and development, production, printing and sales of paper packaging products. Its products cover corrugated cartons, cardboard, boutique wine boxes, cigarette trademarks, etc., as well as providing comprehensive paper packaging solutions for packaging design, research and development, testing, production, inventory management, logistics and distribution.cigarette box
Paper packaging refers to the commodity packaging made of paper and pulp as the main raw materials. It has high strength, low moisture content, low permeability, no corrosion, and certain water resistance. Moreover, the paper used for food packaging also requires sanitation, sterility, and pollution-free impurities.hemp packaging
Under the policy guidance of the “plastic restriction order”, the “Opinions on Accelerating the Green Transformation of Express Packaging”, and the “Notice on Printing and Distributing the” Fourteenth Five-Year Plan “plastic pollution control action plan”, the demand for paper-based products is expected to rise significantly. Tobacco box
Qiu Chenyang told reporters that with the improvement of people’s awareness of environmental protection, many countries have issued “plastic restriction orders” or “plastic prohibition orders”. For example, New York State of the United States began to implement the “plastic prohibition order” on March 1, 2020; EU member states will prohibit the use of disposable plastic products from 2021; China issued the Opinions on Further Strengthening the Treatment of Plastic Pollution in January 2020, and proposed that by 2020, it would take the lead in prohibiting and restricting the production, sales and use of some plastic products in some regions and areas.vape packaging
The use of plastic products in daily life is gradually limited, and green packaging will become an important development trend of the packaging industry. Specifically, food-grade cardboard, environment-friendly paper-plastic lunch boxes, etc. will benefit from the gradual prohibition of the use of disposable plastic tableware and the increase in demand; Environmental protection cloth bags, paper bags, etc. will benefit from the policy requirements and be promoted in shopping malls, supermarkets, pharmacies, bookstores and other places; Corrugated box packaging benefited from the ban on the use of express plastic packaging.
In fact, the demand for packaging paper is inseparable from the demand changes of downstream consumer industries. In recent years, the food, beverage, household appliances, communication equipment and other industries have shown high prosperity, effectively driving the growth of the paper packaging industry. Mailer box
Affected by this, Dashengda achieved operating revenue of about 1.664 billion yuan in 2021, an increase of 23.2% year on year; In the first three quarters of 2022, the realized operating revenue was 1.468 billion yuan, up 25.96% year on year. Jinjia Shares (002191. SZ) achieved a revenue of 5.067 billion yuan in 2021, an increase of 20.89% year on year. Its main revenue in the first three quarters of 2022 was 3.942 billion yuan, an increase of 8% year on year. The operating revenue of Hexing Packaging (002228. SZ) in 2021 was about 17.549 billion yuan, up 46.16% year on year. Pet food box
Qiu Chenyang told reporters that in recent years, with the gradual transfer of the global packaging industry to the developing countries and regions represented by China, China’s paper product packaging industry has become increasingly prominent in the global paper packaging industry, and has become an important paper product packaging supplier country in the world, with the export scale expanding.
According to the statistics of the China Packaging Federation, in 2018, the total import and export volume of China’s paper packaging industry was US $5.628 billion, up 15.45% year on year, of which the export volume was US $5.477 billion, up 15.89% year on year; In 2019, the total import and export volume of China’s paper packaging industry was US $6.509 billion, of which the export volume was US $6.354 billion, up 16.01% year on year; In 2020, the total import and export volume of China’s paper packaging industry was US $6.760 billion, of which the export volume was US $6.613 billion, up 4.08% year on year. In 2021, the total import and export volume of China’s paper product packaging industry will be US $8.840 billion, of which the export volume will be US $8.669 billion, up 31.09% year on year. Bouquet packaging box
Industry concentration continues to increase
Under the background of strong demand, paper packaging enterprises are also increasing their production capacity, and the industry concentration continues to increase. Cigar box
On July 21, Dashengda issued a plan for the non-public offering of shares, with a total amount of 650 million yuan to be raised. The raised funds will be invested in the intelligent R&D and production base project of pulp molded environmental protection tableware, the construction project of Guizhou Renhuai Baisheng intelligent paper wine box production base and the supplementary working capital. Among them, the project of intelligent R&D and production base for pulp-molded environment-friendly tableware will have a production capacity of 30000 tons of pulp-molded environment-friendly tableware annually. After the completion of the construction project of Guizhou Renhuai Baisheng Intelligent Paper Wine Box Production Base, the annual output of 33 million fine wine boxes and 24 million card boxes will be realized.
In addition, Nanwang Technology is rushing to IPO on the GEM. According to the prospectus, Nanwang Technology plans to raise 627 million yuan for the GEM listing. Among them, 389 million yuan was used for the construction of 2.247 billion green and environment-friendly paper products intelligent factories and 238 million yuan was used for paper products packaging production and sales projects.
Dashengda said that the project was intended to increase the company’s environmental protection tableware business, further expand the wine package business, enrich the company’s product business line and improve the company’s profitability.
An insider told the reporter that the medium and high-end corrugated box enterprises with certain scale and strength in the industry have one of the main goals of further expanding the production and marketing scale and increasing market share.
Due to the low entry threshold of China’s paper product packaging industry manufacturers and the wide range of downstream industries, a large number of small carton factories depend on local demand to survive, and there are many small and medium-sized carton factories at the low end of the industry, forming an extremely fragmented industry pattern.
At present, there are more than 2000 enterprises above the designated size in the domestic paper product packaging industry, most of which are small and medium-sized enterprises. Although after years of development, a number of large-scale and technologically advanced manufacturing enterprises have emerged in the industry, from the overall perspective, the concentration of the paper product packaging industry is still low, and the industry competition is fierce, forming a fully competitive market pattern.
The above insiders said that in order to cope with the increasingly fierce market competition, the advantageous enterprises in the industry continued to expand the production scale or carry out restructuring and integration, followed the path of scale and intensive development, and the industry concentration continued to increase.
Increased cost pressure
The reporter noted that although the demand of the paper packaging industry has increased in recent years, the industry profit has declined.
According to the financial report, from 2019 to 2021, Dashengda’s net profit attributable to the parent company after deducting non-income was 82 million yuan, 38 million yuan and 61 million yuan respectively. It is not difficult to see from the data that the net profit of Dashengda has declined in recent years.cake box
In addition, according to the prospectus of Nanwang Technology, from 2019 to 2021, the gross profit margin of the company’s main business was 26.91%, 21.06% and 19.14% respectively, showing a downward trend year by year. The average gross profit rate of 10 comparable companies in the same industry was 27.88%, 25.97% and 22.07% respectively, which also showed a downward trend.Candy box
According to the Overview of the Operation of the National Paper and Paperboard Container Industry in 2021 issued by the China Packaging Federation, in 2021, there were 2517 enterprises above the designated size in China’s paper and paperboard container industry (all industrial legal entities with an annual operating income of 20 million yuan and above), with a cumulative operating income of 319.203 billion yuan, a year-on-year increase of 13.56%, and a cumulative total profit of 13.229 billion yuan, a year-on-year decrease of 5.33%.
Dashengda said that the main raw material for the production of corrugated cartons and paperboard was base paper. The cost of base paper accounted for more than 70% of the cost of corrugated cartons during the reporting period, which was the main operating cost of the company. Since 2018, the fluctuation of base paper prices has intensified due to the impact of the rise in the prices of international waste paper, coal and other bulk commodities, as well as the impact of a large number of small and medium-sized paper mills limiting production and closing down under the pressure of environmental protection. The change of base paper price has a great impact on the company’s operating performance. As a large number of small and medium-sized paper mills are forced to limit production and shut down under environmental pressure, and the country further restricts the import of waste paper, the supply side of base paper will continue to bear great pressure, the relationship between supply and demand may still be unbalanced, and the price of base paper may rise.
The upstream of the paper product packaging industry is mainly papermaking, printing ink and mechanical equipment, and the downstream is mainly food and beverage, daily chemical products, tobacco, electronic appliances, medicine and other major consumer industries. In the upstream raw materials, base paper accounts for a high proportion of production costs. Dates box
Qiu Chenyang told reporters that in 2017, the General Office of the State Council issued the “Implementation Plan on Prohibiting the Entry of Foreign Wastes and Promoting the Reform of the Solid Waste Import Management System”, which made the import quota of waste paper continue to tighten, and the raw material of base paper waste paper was restricted, and its price began to rise all the way. The price of base paper continues to rise, creating great cost pressure on downstream enterprises (packaging plants, printing plants). During the period from January to February 2021, the price of industrial base paper rose unprecedentedly. Special paper generally rose by 1000 yuan/ton, and individual paper types even jumped by 3000 yuan/ton at one time.
Qiu Chenyang said that the paper product packaging industry chain is generally characterized by “upstream concentration and downstream dispersion”. chocolate box
In Qiu Chenyang’s view, the upstream paper industry is highly centralized. Large enterprises such as Jiulong Paper (02689. HK) and Chenming Paper (000488. SZ) have occupied a large market share. Their bargaining power is strong and it is easy to transfer the price risk of waste paper and coal raw materials to downstream packaging enterprises. The downstream industry covers a wide range of industries. Almost all consumer goods manufacturing industries need packaging enterprises as supporting links in the supply chain. Under the traditional business model, the paper products packaging industry almost does not rely on a specific downstream industry. Therefore, the packaging enterprises in the middle have poor bargaining power in the whole industrial chain. Food box
Post time: Feb-09-2023
