Source: Huayin Carton
On February 27, Nine Dragons Paper held its 2019 mid-term results conference in Hong Kong. According to the management, in the first half of the year, affected by China-US trade and environmental protection policies, paper demand and prices were under pressure. Except for the increase in total sales, gross profit and gross profit margin both fell, and net profit dropped by 48%. Zhang Yin said that there have been two price increases before and after the Spring Festival, and his younger Zhang Chengfei continued to point out that the current price and cost of finished paper are still relatively low. Therefore, according to the trend of finished paper and raw materials, the finished paper should have a 200-point increase from now on. It seems that Xiaolong has to raise prices again, and the increase is likely to be 200/ton.
Nine Dragons Paper held a performance conference, and its net profit dropped 48% in the medium term
On the evening of February 26, 2019, Nine Dragons Paper (02689) announced that for the six months ended December 31, 2018, the company's turnover was 30.328 billion yuan, an increase of 18.2% year-on-year; the company's owner attributable profit 22.59 Billion, down 48% year-on-year; earnings per share 0.48, interim dividend of 0.1 per share.
Excluding the exchange loss (net of tax) of operating and financing activities of approximately RMB 198 million, the profit attributable to equity holders of the company during the period was approximately RMB 2.458 billion, representing a decrease of 43.5% as compared with the same period of last year due to the increase in raw material costs ( Mainly due to the cost of waste paper and coal) and the decline in product prices. During the period, the gross profit margin decreased from 24.5% to approximately 15.5%.
The announcement showed that the group's sales reached approximately 7.5 million tons during the period, an increase of 19.0% year-on-year. The increase in sales was driven by the increase in sales of the PRC, Vietnam and newly acquired US businesses of approximately 700,000 tons, 100,000 tons and 400,000 tons, respectively.
Sales of paperboard, high-strength corrugated paper and tissue paper during the period increased by approximately 16.9%, 19.5% and 145.5% respectively over the same period last year, while the coated gray-backed white paper decreased by about 4.8% over the same period last year. . At the same time, the company's recently acquired pulp and paper mill also sold wood pulp and recycled pulp to the US market during the period.
Zhang Chengfei: The cost is higher than the paper price, and now the finished paper should have a 200% increase.
On February 27, Chairman Zhang Yin attended the performance conference and said that the company is currently looking for new development opportunities in Asia, or there will be new progress next year. The company's earnings have entered a stage of steady growth, and the future will not develop rapidly, resulting in a significant increase in liabilities. The company will do its best to pay dividends. According to the company's current financial situation, the dividend payout ratio is expected to reach about 30-40%. She added that as long as the financial health allows, she will do her best to pay dividends.
Zhang Yin said that the trade war had an impact on performance during the reporting period. However, she is cautiously optimistic about the future of Sino-US trade and economics. I believe that the manufacturing situation will not further deteriorate, but the industry will have to improve, depending on the specific implementation agreement. Imported waste paper has been subject to a 25% tariff. Zhang Yin believes that the overall raw material price is basically stable this year. At present, the industry has also tried to increase the supplementary raw materials, develop wood pulp and recycled pulp to reduce costs.
Zhang Yin said that after the Lunar New Year, the company's sales continued to be strong, and production and sales were balanced. She said that she is optimistic about the economic performance this year. The company has increased the price before the year, and there is a small increase in the price after the New Year, about 50-100 RMB (the same below). I believe that the company's operating conditions in the second half of the year will not be worse than the first half of the year, but it is difficult to estimate the gross profit margin.
Zhang Chengfei, vice chairman and deputy chief executive, pointed out that the proportion of imports fell and the domestic consumption growth did not match, reflecting that there is still a certain gap in domestic raw materials. It is believed that the current price of waste paper in different regions is about 2200-2400 yuan (the same below), from the overall demand. Analysis shows that the price should be around 2,500. He continued that the current price of finished paper is still low compared with the cost. Therefore, according to the trend of finished paper and raw materials, there should be a 200 increase in finished paper from now on.
When asked about the issue of inheritance, Zhang Yin said that the boss, the second child, and the third child are all in the same place. They can make inheritance arrangements when they come to power, emphasizing that they each have their own profession and responsibility. The inheritance also has very good arrangements. It takes time to take over. So it is already deployed.
At the end of 2021, the total production capacity of Nine Dragons Paper Group will exceed 19 million tons.
On December 31, 2018, Nine Dragons Paper's total designed annual production capacity was 15.3 million tons. The new paper machine of the Chongqing base was put into operation in February 2019, and the production capacity of the group was increased by 550,000 tons.
According to the management, 1HFY19's sales volume reached a record high of 7.5 million tons in the context of the tightening of international and domestic industries. During the period, the two pulp mills in the United States completed a total production capacity of 380,000 tons, aiming to reduce raw material costs. With the commissioning of four paper machines in the late 2019 and the upgrading and commissioning of four US plants, the total capacity of Nine Dragons Paper will exceed 19 million tons by the end of 2021.
Editor in charge: Cao Yu
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