The hottest paper price soars, looming capital sec

2022-08-24
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The soaring paper price reveals the "secret war" of capital: who is controlling the market pricing power

release date: Source: China business daily

the paper price rose unstoppably, and once rushed to the hot search. Today, the price of white cardboard has even doubled in the first half of this year

"the reason for the rise in the price of white cardboard is based on the rising cost and market demand." An executive of a listed paper company said in an interview that the sharp rise was due to the "unification of pricing power" in the white cardboard market. At present, golden light paper (China) Investment Co., Ltd. (hereinafter referred to as "app (China)"), Chenming Paper and Wanguo sun occupy 80% of the white cardboard market. A large Japanese plastic manufacturer has thrown olive branches to Rhodes, and app (China) has a monopoly of 50%, which seems to have the pricing power of white cardboard

it is noted that app (China) increased the shares of its competitors Chenming Paper and sun paper (the same actual controller of sun paper and Wanguo Sun Group is Sun Group) through its Ningbo Asia paper tube and carton Co., Ltd. (hereinafter referred to as "Ningbo tube and carton") and Bohui group in the first quarter of this year, with the total shareholding of 3.89% and 4.38% respectively

for the above-mentioned shareholding increase, we contacted app (China) for an interview, and as of press time, no reply has been received. A person from the Securities Department of sun paper said to that at present, app (China) buying company shares is a kind of commercial speculation, which is why it is optimistic about the company's potential. Judging from the current overall shareholding of app (China), it is not convenient for the company to explain that it has not reached the boundary of raising the card (holding 5%)

economist songqinghui believes that as far as app (China) purchases the shares of its competitor Chenming paper, app (China) accounts for "half" of the white cardboard Market in terms of market share, and no one knows the future trend of the market better than it. After all, its market "pricing power" seems to have been firmly grasped. In addition, it is not excluded that this is a "deterrent" to consolidate its leading position in the industry from the capital market

control price

behind the continuous rise in the price of white cardboard, the market competition pattern has quietly changed

"the main reason for the rise in the price of white cardboard is based on the rising cost and market demand." The above listed paper enterprise executives told that the sharp rise was due to the "unification of pricing power" in the white cardboard market

China Securities Peng credit data show that China's total production capacity of white cardboard in 2019 was about 10.92 million tons, of which the production capacity of app (China) was about 3.12 million tons, Bohui paper was about 2.15 million tons, Chenming paper was about 2 million tons, and Wanguo sun was about 1.4 million tons, accounting for 79.40% of the total production capacity of white cardboard in China

from the perspective of market pattern, since app (China) acquired Bohui paper, the former has become the absolute leader of domestic white cardboard. The competition pattern of white cardboard market seems to usher in the situation of "one dominant company"

in September 2020, app (China) completed the delivery of its tender offer to acquire Bohui paper shares, holding a total of 48.84% equity of Bohui paper, becoming the actual controller of Bohui paper; On October 14 of the same year, Bohui paper announced the change of the board of directors and the board of supervisors, and app (China) sent its management to Bohui paper

at the end of June before the completion of the above-mentioned share delivery, the project acquired by app (China) for Bohui paper passed the national antitrust investigation. At that time, the price of white cardboard was 5100/ton; In July, the average price of Bohui white cardboard increased by 300/ton month on month; Two months later, the price of white cardboard of Bohui paper industry has reached 6400/ton; By the beginning of 2021, its price had risen to 7500/ton

it is worth noting that on January 25, 2021, several major domestic paper industry leaders issued price increase letters one after another, announcing that they would rise 500/ton in a row from February to March, and a new wave of price rise came again. Among them, Bohui paper said that due to the significant increase in operating costs and the prices of various raw materials, the price of "white card/copper plate card/food card" series products will increase by 500/ton from January 26, 2021

since February 26th, 2021, our team and I are constantly learning to increase the price of white cardboard by 500/ton again; On March 1, the white cardboard market suddenly made another effort to increase the price, and Bohui paper increased the price by 1000/ton. So far, the price of white cardboard has entered the era of ten thousand

it is understood that at the end of February 2021, paper mills began to receive new orders in March, and the signing price increased by 500/ton compared with the previous period. However, in early March, compared with February, the increase in order taking price expanded from the original 500/ton to around 1800/ton, of which Guangxi Jingui Paper Co., Ltd. under app (China) increased by 1800/ton. This makes the quotation of mainstream brand white cardboard reach 10000/ton

under the influence of this factor, the share prices and performance of related listed enterprises such as Bohui paper, Chenming Paper and sun paper increased significantly in the first quarter of this year

on April 19, 2021, Chenming paper released its performance report for the first quarter of 2021, saying that the company achieved an operating revenue of 10.206 billion, an increase of 67.71% year-on-year; The net profit attributable to shareholders of listed companies was 1.179 billion, with a year-on-year increase of 481.42%, an increase of nearly five times. The first quarter report of 2021 disclosed by Bohui paper showed that during the reporting period, it achieved a revenue of 4.053 billion, a year-on-year increase of 55.49%, a net profit attributable to the parent of 811 million, a year-on-year increase of 337.24%, and a non net profit of 808 million, a year-on-year increase of 344.83%. On April 29, the first quarter performance announcement released by sun paper showed that the revenue in the first quarter of 2021 was about 7.643 billion, an increase of 37.66% year-on-year; The net profit was about 1.108 billion, with a year-on-year increase of 106.71%

in terms of share price, as far as Chenming paper is concerned, the opening share price of Chenming paper was 5.45 per share on September 30, 2020, and its closing price was 10.89 per share as of May 26, 2021. During this period, the highest share price occurred on April 9, reaching about 12.5 per share

"white cardboard enterprises benefited from the upgraded 'plastic restriction order' issued by relevant national departments in January 2020, namely the opinions on further strengthening plastic pollution control." Insiders told analysts that the policy clearly stipulates that the use of non degradable plastic bags will be comprehensively restricted in many places by the end of 2020. After the implementation of the policy, white cardboard, the main product of replacing plastic with paper, has become a "hot commodity", with the market in short supply and extremely prominent price performance. For example, in the fields of preservation and data processing, such as lunch boxes used for catering takeout and paper bags in contact with food, white cardboard has become one of the alternative products

capital game

it is noted that after the completion of the acquisition of Bohui paper by app (China) in September 2020, it entered the top ten shareholders of Chenming Paper and sun paper through its Ningbo tube box in the fourth quarter of 2020, holding 0.62% and 2.08% equity respectively. Since then, in the first quarter of this year, app (China) once again increased its holdings of Chenming Paper and sun paper through Ningbo tube box and Bohui group, with their shareholding ratios reaching 3.89% and 4.38% respectively

on March 31, 2021, in view of the increase in shares held by app (China), Yuanxikun, Secretary of the board of directors of Chenming paper, said at the performance presentation meeting: "The company is a local state-owned enterprise, the actual controller is the local government, and the equity structure is stable. At present, the concentration of the industry is getting higher and higher, especially the main paper types such as white card, coated paper and cultural paper. With the recovery of downstream demand, the prices of the main paper types are raised, and the prosperity of the industry is rising. Industrial investors know better which company in the industry has the advantage of profitability; the company also pays close attention to the changes in shareholder holdings at any time."

song Qinghui said that from the perspective of purchasing the shares of sun paper and Chenming paper, it can not be ruled out that it is a "deterrent" for app (China) to consolidate its leading position in the industry from the capital market. Last year, app (China) acquired Bohui paper, a competitor, and its capital operation, which once occupied 50% of the market, is still vivid

the time is set back to 2018, when white cardboard set off a price war. Bohui paper continued to increase production and expand market share. App (China) took "counter measures" to implement the strategy of full production and full sales. The paper price has been falling from the peak of 6600~6700/ton in April 2018 to 4950/ton in January 2019, and then began to stabilize

however, there is no winner in this simple and crude price war. Since then, app (China) has launched the strategy of acquiring Bohui paper. From June 20, 2019, Ningbo tube box under app (China) raised its brand for the first time, Bohui paper. In less than five months, Ningbo tube box completed the fourth round of raising its brand at a cost of more than 1billion

it is worth mentioning that 202 further summarized and exchanged the innovative scientific and technological achievements and utilization achievements in the field of non-ferrous materials in recent years. On January 6, 0, app (China) signed the share transfer agreement with the actual controllers Yang Yanliang and Li Xiurong on the 100.00% equity transfer of Bohui group. If the acquisition is completed, app (China) and its persons acting in concert will directly and indirectly hold 48.84% of the shares of Bohui paper. According to the announcement released by Bohui paper on August 27, 2020, its actual controller was changed from Yang Yanliang to Huang Zhiyuan (Chairman of app (China))

downstream pressure

some insiders said that the rise in paper prices in the past six months can be described as "rapid progress", which will inevitably cause a very serious blow to the printing and packaging enterprises that take paper as the main printing material, especially the enterprises that seize the market with low prices and low profits in the early stage

some print shop owners said that the paper price has risen continuously, but the printing price has remained unchanged, which has made their profits lower and lower. Now the profit point has been reduced by almost 30%

in fact, the previous sharp rise in the price of chemical raw materials such as paper industry has attracted outside attention

during the two sessions this year, Hu Dezhao, member of the National Committee of the Chinese people's Political Consultative Conference and chairman of Baiyun electric, brought a proposal on preventing the surge of raw materials and maintaining "six stabilities" and "six guarantees"

the above proposal mentioned that after the Spring Festival holiday, the price of raw materials continues to jump wildly by 20% to 30%

the content of the proposal shows that it is normal for the traditional manufacturing industry to account for more than 70% - 80% of the cost of materials. The vicious rise in the price of raw materials makes small and medium-sized enterprises miserable, and puts great pressure on the "six stabilities" and "six guarantees". "The main complaint of small and medium-sized enterprises is that the prices of production materials are rising, and downstream customers are unwilling to raise prices. Life is particularly difficult. Some materials are a monopolistic seller's market, which has risen sharply from level to level, deviating from the normal price, resulting in the cost price being higher than the product price. Some enterprises choose to refund and compensate, and some enterprises are in trouble because the price of receiving orders cannot cover the cost."

Qin Chong, a researcher at Zhongyan Puhua, told that the continuous price rise of white cardboard is also a great cost pressure on downstream enterprises (packaging plants, printing plants), and consumers may finally pay for it. "When consumers buy products, they may have to spend more money on packaging."

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