Investment strategy of the hottest paper industry

Investment strategy of the paper industry in 2006

in 2005, the national paper sales revenue was 317.1 billion yuan, an increase of 27.1% over the same period last year, and the profit was 13.8 billion yuan, an increase of 17.0% over the same period last year. The profit growth is lower than the income growth, mainly because the increase of raw materials and transportation costs has squeezed the profit space

opportunities and challenges coexist in the development of paper industry in 2006. From the perspective of the overall development of the industry, the demand growth of paper products will keep pace with the development of the national economy in the next few years. At the same time, competition will intensify the differentiation of the industry. The differences in product structure and capacity scale are accelerating the differentiation of Companies in the industry. It is expected that 2006 will be an important time for the reshuffle of the paper industry, and the market competition pattern will move from full competition to oligopoly competition. It is positioned as high-end products, has scale advantages, and has strong cost control ability, and will eventually win in the new round of competition

politics shows that the replaced detector has problems, and the policy environment encourages enterprises to become bigger and stronger. Five years of coated paper, paper and unbleached kraft linerboard have been launched. Under the protection of this policy, the paper industry will obtain a relatively loose competitive environment, and some paper listed companies with resources and scale advantages are expected to continue to obtain high-speed growth space

it is estimated that the pulp price in 2006 will maintain the current level due to the high cost. The prices of major domestic paper products will still show a downward trend, but the degree of decline will be reduced. The rising prices of raw materials and energy and the rising transportation costs have increased the competitive pressure of paper production enterprises. The differentiation of enterprise profits will become inevitable. Advantageous paper-making enterprises will enhance their competitiveness by strengthening cost management and improving the self-sufficiency rate of pulp, and gradually complete the important task of industry integration

the introduction of advanced equipment, investment in new production lines and expansion of production scale will become the key to the future profit growth of the company. At present, many listed companies such as Chenming paper, Huatai Co., Ltd. and Shanying paper have projects under construction or newly put into production. It is expected that the future performance growth will be significantly improved

although it is not clear whether it is still used in the market with the same industry abroad, it has been confirmed that the P/E ratio of leading companies of domestic paper enterprises is low, and the investment value appears. We rated Chenming paper, Huatai Co., Ltd. and Shanying paper as "recommended"

information source: Ping An Securities

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