Bohui Paper Co., Ltd., the most popular white pape

2022-10-14
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The supply and demand of white cardboard is tight. Can Bohui paper, whose share price has risen 162%, still buy it

release date: Source: interface

white cardboard appeared in the army of raw material price increases

due to the impact of the epidemic, the prices of various types of paper fell significantly in the second quarter of this year. With the domestic epidemic under control, the demand for all kinds of paper began to export the test results to excel and print the test report in the second half of the year, and the price also rebounded. Among them, the price of white cardboard rebounded most significantly. In June, the ultra-low price of white cardboard was cancelled; From July to September, major white cardboard manufacturers issued price increase letters one after another; From October to November, the paper mill sent two more rounds of price increase letters, of which the price was increased by 500/ton on October 1 and 300/ton on November 1

Bohui paper, as the leader of the white cardboard industry, has made a lot of money in this round of price rise. The company's net profit attributable to its parent company in the third quarter was 260million, a year-on-year increase of 47 times. In the first three quarters of this year, Bohui paper's operating revenue was 9.327 billion, an increase of 43.4% year-on-year; The net profit attributable to the parent company was 527 million, with a year-on-year increase of 284.7%

the beautiful performance is also reflected in the stock price. Bohui paper has increased by 162% this year. Investors are concerned that can the rising price trend of white cardboard continue until 2021? Does Bohui paper still have investment value

can the rising price trend of white cardboard continue

the trend of each paper type is significantly related to its supply and demand. Among them, the supply and demand pattern of white cardboard is the best

white paperboard is the paper with the most tight supply and demand, and the average operating rate has continued to maintain at a high level of more than 80%. The compound growth rate of demand of the white paperboard industry has reached 6% in the past five years. In 2019, the total domestic demand reached 8.02 million tons, with a year-on-year increase of 14%

the implementation of the new plastic limit order will also expand the demand for white cardboard. In January this year, the national development and Reform Commission and the Ministry of ecological environment released the "opinions on Further Strengthening the control of plastic pollution" (hereinafter referred to as the "opinions"), which proposed to orderly prohibit and restrict the production, sale and use of some plastic products, and actively promote alternative products. The opinions clearly emphasizes that the places where the use of plastic products is prohibited or restricted mainly include express delivery, catering takeout and retail malls, and proposes to promote the application of alternative products such as environmentally friendly cloth bags, paper bags and other non plastic products and degradable shopping bags. Therefore, white cardboard has become one of the alternative products in the fields of lunch boxes used in catering takeout and paper bags in contact with food. By the end of 2022, some regions will implement the opinions. At that time, the demand for white cardboard is expected to increase

in addition, the concentration of the white cardboard industry is also the highest among all kinds of paper. The higher concentration strengthens the voice of the supplier, making the price increase more smoothly implemented. At present, the Cr4 of the white cardboard industry has reached 82%, and the largest shareholder of Bohui paper is Jinguang paper, which is ranked first, with Bohui paper, Chenming Paper and sun paper respectively. 2. Continue to refine and introduce relevant industrial support policies. This year, golden light paper has just completed the acquisition of Bohui paper, and the pattern of white cardboard industry is further concentrated. Golden light paper and Bohui paper account for more than 50% of the market. The degree of competition in the industry has also decreased. The sharp price increase for three consecutive months since September has made white cardboard rise to an all-time high

the demand for white cardboard recovered, but the supply was very limited. In 2021, the production capacity of 1.3 million tons of white cardboard of golden light paper industry was put into operation, but the relocation of Ningbo base of golden light paper industry will reduce the production capacity by 600000 tons. Sun paper will have a capacity of 900000 tons and put into operation in the fourth quarter of 2021. On the whole, the new capacity at the supply side of the industry is not large. Therefore, the supply and demand balance of white cardboard is still tight in the short term. In addition, golden light paper and Bohui paper, which are the first and second in the white cardboard industry, have merged, greatly reducing competition, which is conducive to the upward movement of the white cardboard price center. Therefore, the price rise of white cardboard is expected to continue until 2021

how much can Bohui paper benefit

since this year, the share price of Bohui paper has risen 162%. Even if the price rise of white cardboard will continue, how much can Bohui paper earn

the data shows that the ton price of white cardboard in Bohui paper industry has reached 7000/ton, close to the previous ton price peak in 2017. The annual average ton price in 2021 is expected to remain high

in terms of output, the total production capacity of Bohui paper industry in 2019 reached 3.73 million tons, including 2.15 million tons of white cardboard (650000 tons in Zibo, Shandong and 1.5 million tons in Yancheng, Jiangsu). In the same year, the sales volume of white cardboard of Bohui paper industry was 175.38 tons. Assuming the average growth rate of the industry in 2021, the sales volume of white cardboard of Bohui paper industry can reach 197 tons, which has significantly exceeded the sales volume in 2017. This also means that the net profit of Bohui paper in 2021 is expected to exceed the historical record of 2017. According to the unanimous expectation of securities companies, the net profit of Bohui paper industry is expected to reach 2billion in 2021. At present, the market value of Bohui paper is 18.5 billion, corresponding to a valuation of 9.3 times the price earnings ratio in 2021. The estimated P/E ratios of sun paper and Chenming Paper in the same industry in 2021 are 14.25 times and 8.75 times. In contrast, the valuation of Bohui paper is still in a reasonable range

in terms of cost, Bohui paper also has room for improvement

among the three fees, the largest cost of Bohui paper is the financial cost. In 2019, the financial expenses reached 512million, while the net profit of that year was only 256million. In recent years, Bohui paper industry has borrowed heavily in order to expand production capacity, and the asset liability ratio has reached 70.57%. As of the third quarter report, the total interest bearing liabilities of Bohui paper industry were 8.906 billion

with the improvement of Bohui paper's profit level, its capital pressure is also expected to be relieved. In the third quarter of this year, the total interest bearing liabilities of Bohui paper industry have decreased by 356million compared with the end of 2019. At the same time, the company's operating cash flow also improved significantly. In the first three quarters, the net operating cash inflow was 2.186 billion, an increase of 1.2 billion over the same period last year, mainly due to the significant increase in advances received (contract liabilities). The third quarterly report also showed that the advance receipts of Bohui paper industry were 727million, an increase of 350million over the same period last year. As the price of white cardboard rose, dealers' willingness to take goods increased and began to increase inventory

in the first three quarters of this year, the financial expense rate of Bohui paper was 3.8%, down 2.32 percentage points year-on-year and 1.62 percentage points month on month. Backed by golden light paper, Bohui paper's financing channels have been broadened and the cost of capital has decreased

in addition, the capital project expenditure of new Dow will be reduced from $4billion a year before to $2.8 billion. After the acquisition of Bohui paper, golden light paper has completed the replacement of the board, supervisor and senior management. Gongshenyou sent by golden light paper will still serve as the chairman of the company from the perspective of global property operation. The four non independent directors of the new board of directors of the company are also from golden light paper, with many years of experience in the paper industry. The general manager of Bohui paper was also replaced by Lin Xinyang from Jinguang paper. In the future, it is also worth looking forward to how much improvement in management ability golden light paper can bring to Bohui paper

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