Paper printing and packaging: paper industry analysis

The first and second quarters continued the high growth trend of the first quarter, with revenue and profit increased from the first quarter.The revenue of papermaking sector reached 28.09 billion yuan in the first and second quarters, up 24% year-on-year and up 10.5% quarter-on-quarter.Net profit attributable to the parent reached 2.82 billion yuan, up 148% year on year and 28.2% month-on-month.■ Continued improvement in profitability and operating capacity of paper industry: 1) Profitability: the comprehensive gross profit margin of paper industry is 24.2% in the first half of 2017, 3.1pct higher than that of the same period last year;With single integrated gross margin in the second quarter of 23.9%, year-on-year increase of 2.6 PCT net interest rate of 9.4% in the first half of the paper plates, improve 4.6 PCT from the same period a year earlier, the single net interest rate of the second quarter and by 10.1%, year-on-year increase 5 PCT, paper plate continues to improve, 2) ability to operating profitability: in the first half of 2017 the paper supply tight, paper mills have shorten payment days or require cash settlement, such as accounts receivable income proportion is 25.9%, paper plate 7.4 PCT year-on-year decline;The inventory accounted for 41.9% of the revenue, down 6.2 PCT year on year, at a low level. The paper industry boom will continue to 18 years, paper enterprises will continue to make good profits: capacity (market/policy, etc.) + steady growth of demand + enterprise coordination, paper industry began to recover in the middle of 2016.Combined with the demand peak season of paper industry & dealers replenishing inventory factors, paper prices have accelerated since the end of 2016.Considering the rebound of pulp prices and the arrival of the peak season, we believe that wood pulp grade paper (copperplate/offset/white card paper) a new round of price increases just started, the price trend may continue to early next year.Box/corrugated prices have hit a record high, the future will follow the price trend of waste paper, is expected to maintain a high within the year.According to our tracking, it is expected that the new production capacity of 18H2 will begin to land successively, and the structure is mainly box board/corrugated paper.We judge wood pulp grade paper boom for 18 years continued to improve;Box board/corrugated production capacity has increased, but the overall industry boom is expected to maintain a high level