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SHENZHEN RUILIANFA INDUSTRIAL DEVELOPMENT CO.,LTD
Address: No.137，Fumin industrial Zone, Guanlan road, Baoan district, Shenzhen city, China
Tel :0755 -28,053,502
Fax :0755 -28,053,501
Contact: Mr. Luo
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Paper industry caused earnings bottoming out
Date：2012-4-1 14:12:36
The profitability of the paper industry bottomed out in early 2012, short-term profits rising trend to determine the plate valuation in the history of the bottom of the fill inventory is expected to drive the valuation of fixed power (in the range 10-20%), industry short-term performance can still look forward to Red February convention is expected to reproduce. Recommended combinations: from the point of view of the margin of safety, it is recommended: Chenming Paper (11 years of PB 0.79 times), China and Thailand shares; flexibility from the profitability point of view, it is recommended that the Sun Paper (looking forward to the flexibility of the dissolving pulp release), Yueyang Forest & Paper (pulp facing the dual rebound to the paper profit; from the internal potential to the point of view, room for improvement); from the perspective of event-driven, it is recommended Bo Paper (to promote the convertible bonds of effort) and King Hing Paper (investment Suopuaisi pre-disclosure expected to contribute to investment income).
Reason and logic: 1) the valuation point of view: the paper industry and long-term with investment value. Paper plates continued to decline since May, 11 years after most companies have been below the net assets (0.8 times PB), already contains more pessimistic forecasts. The valuation point of view reflects the medium-and long-term security. 11 since the end of the scheduled increase in the form of Yueyang Forest & Paper (shareholders), in smooth clean soft, Qingshan as well as Hong Kong stocks Lee & Man Paper holdings of major shareholders of behavior; do not rule out that other companies follow similar initiatives. 2) the profitability point of view: 12 year profitability of the industry bottomed out, paper mill, pulp mill tentative price increases, the magnitude of the downstream acceptance, depending on the profitability of short-term trend towards an improvement to determine. 11Q4 profitability of the industry to accelerate the bottom, the combined production and sales for 12 years due to the holidays in January, is expected to be significant losses after the Spring Festival, along with the middlemen and the complement of the downstream inventory and cheap raw materials, earnings (short-term profit is expected to rebound to the good trend OK, medium-and long-term magnitude of the improvement depends on the macro-improvement and capacity controls).
The growth rate of monthly decline, a slight decline in mill inventory, middle and lower reaches of the stock is still below a reasonable level. Industry supply and demand imbalances lead to the mill to continue to reduce the operating rate, 11-year growth rate of paper production showed a down trend experienced postpartum mill inventory only slightly decreased but still higher than the historical average. Brokers and downstream inventory levels are still significantly lower than the historical average.
Mill profitability under pressure, 12 years after the Spring Festival advantage of the opportunity to raise prices, paper prices rose steadily over the beginning of the year. Paper industry annual production capacity of large-scale release coincides with the the 11H2 downstream demand weak paper prices continued to drop, combined with the use of high-priced pulp inventory, industry profits significantly pressure. Due to the 12 years before the Spring Festival, the middle and lower reaches of lower inventory levels, Festival exists to fill the inventory requirements, and paper enterprises the opportunity to raise prices to improve profitability. Although the middle and lower reaches of manufacturers to raise prices to the implementation of the rhythm and amplitude differences, but overall, the price of paper rose steadily over 12 in early.
Domestic pulp prices the beginning of the steady rise of the price increase of the outer disk. 11H2 international pulp prices fell sharply, a number of international pulp mill at a loss, earnings under pressure in early succession to mention up the offer. As of February 10, the domestic pulp average spot price rose 2.5 percent compared to the beginning of the year. Pulp prices and waste paper prices stabilized and Chinese companies a large number of bargain-hunting.
Ton of paper gross profit net profit is expected to bottomed out, expect all kinds of paper earnings will be the steady rise of 11 December and 12 January. According to our gross margin model of tons of paper, coated paper, woodfree paper, white cardboard to wood pulp as the main raw materials in January has begun to use the pre-low-cost pulp earnings bottoming out; waste paper as the main raw material of the white paper. The cardboard is expected in February will begin using low-cost waste paper, will also improve profitability (considering the low off-season started in January led to tons of the high cost factors, will be held in February improved).
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