Due to the increase in paper prices, the growth of many printing and packaging companies did not reach expectations. These companies still allow us to see the positive side.

- May 17, 2018 -

Due to the increase in paper prices, the growth of many printing and packaging companies did not reach expectations. These companies still allow us to see the positive side.

Looking back at 2017, the frenetic fluctuations and rises in paper prices must surely remind many printing and packaging companies.

The following set of data helps us understand the fluctuation and changes of paper prices more clearly and objectively. According to the market price changes of high-strength corrugated paper (80g/m2~160g/m2) from 2016 to early 2018 issued by the National Bureau of Statistics, the high-strength corrugated paper prices experienced three rounds of ups and downs since November 2016. In the second round of the uptrend, the highest price of RMB 5730.00 per ton was created, which was an increase of more than 133.51% compared to the lowest price of RMB 2454.80/ton since 2016.

In addition, the China Packaging Paper Price Index, the China Culture Paper Price Index, and the China Domestic Paper Price Index compiled by Zhuo Chuang Information also stated this point. From the chart below, it is not difficult to see that the prices of different types of paper products are increasing. Following the increase in the opening price of packaging paper in October 2016, the price of cultural paper also steadily increased in 2017, and experienced two waves (from March to June 2017 and from late August to December 2017). The price of tissue paper also began to rise at the end of the third quarter of 2017. Although the growth rate of cultural paper and household paper is not as fast as that of packaging paper, it is also relatively large.

Correspondingly, when the paper-listed companies released the 2017 annual financial report, they showed a significant increase in both revenue and net profit, and many companies even exceeded 100%.

A number of listed companies in the printing and packaging industry have issued annual reports and their performance has been unsatisfactory

At the same time, a number of printing and packaging listed companies also announced 2017 annual financial data. Contrary to the good momentum of sharp increase in both revenue and net profit of paper-making companies, many printing and packaging listed companies have been trapped in a vicious circle of increasing income without increasing profits. Many companies' operating income and net profit have even fallen sharply.

For example, Shaanxi Jinye, which is engaged in cigarette pack printing, has revenue of 774 million yuan in 2017, a year-on-year decrease of 22.14%, and a net profit of 27,117,300 yuan, a year-on-year decrease of 22.20%; in the top 100 printing presses in 2017, it ranked first in the margin. With printing, revenue of RMB 6.948 billion was realized in 2017, a year-on-year increase of 25.36%; net profit was RMB 932 million, a year-on-year increase of 6.53%. It is worth pointing out that although Yutong Printing has achieved volume growth, the increase in net profit was significantly lower than expected, and it did not outperform the increase in operating income.


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