Great Wall Securities: The performance of the paper industry in the second half of the year is unlikely to exceed expectations
Source: Tencent Finance Release time: 2010-06-21 17:13 1675 views Size: 16px 14px 12px
Great Wall Securities: The performance of the paper industry in the second half of the year is unlikely to exceed expectations

讯:下半年展望:业绩难有超预期表现 [CPP114] News: Outlook for the second half of the year: performance is unlikely to exceed expectations

1. High raw material price consolidation

2. Costs drive up paper prices

3. Low performance

Investment strategy: Finding deterministic growth in the standard flat

1. Review of the previous period in 2009, picking up quarter by quarter, slowing down in 2010Q1

1.1 Industry Recovery Process

In the industry's annual strategy report 2010, "Improving Demand Drives Profit Growth", it is pointed out that there are three stages in the recovery of the industry:

The first stage: destocking, demand recovery, and gross margin improvement. In 2008Q4, the inventory of manufacturing enterprises increased sharply, and the operating rate, paper prices, raw materials, and gross profit margins all fell sharply. In 2009Q1, companies took the initiative to destock, and paper prices stopped falling and stabilized. In 2009Q2-Q3, downstream demand gradually recovered, product prices increased, and raw material costs were lower. Gross profit margin started to increase;

The second stage: increased operating rates, increased costs, and stagnant gross profit margins. Since 2009Q4, the operating rate of production enterprises has continued to increase, and raw material demand has increased. The low-priced raw material inventory of production enterprises has long been digested, and costs have risen. Prices are driven by costs, and gross profit margins have remained unchanged or decreased slightly. However, sales volume will continue to increase with the increase in industry demand, and overall profits will continue to rise. At this stage, we believe that it can continue to the first half of this year;

The third stage: supply increases, raw material prices continue to rise, and gross profit margins begin to squeeze. In the second half of 2010, judging from the current investment in fixed assets in the industry, there will be more new capacity in the next year, especially in the second half of the year. The coated paper , containerboard and cultural paper will have a larger capacity. If demand cannot exceed the expected performance, The relationship between supply and demand will be broken.

1.2 Production and sales in 2009 increased quarter by quarter, the growth rate slowed in 2010Q1

Mechanism paper production and sales continue to increase, industry inventory is low

In 2009, the industry's production and sales increased quarter by quarter, and the growth rate in 2010Q1 slowed down. From 2009Q1 to 2010Q1, the output of machine-made paper increased by 1.90%, 7.74%, 15.57%, 25.19%, and 21.06% year-on-year, and sales increased by 1.59%, 8.30%, 18.75%, 26.15%, and 19.49% year-on-year.

In 2009, the industry inventory decreased quarter by quarter. In 2010Q1, the industry's production and sales rate was 98.50%, a year-on-year decrease of 1.4 percentage points, a month-on-month decrease of 0.9 percentage points, and the inventory increased by 6% year-on-year.