2021 China Paper Industry Leadership: Nine Dragons Paper vs Lee & Man Paper

Among China's listed papermakers, representative names include Nine Dragons Paper (02689.HK), Lee & Man Paper (02314.HK), Chenming Paper (000488, 200488, 01812.HK) and Sun Paper (002078), among others.

This report focuses on the following datasets: how leading companies built their business footprint, their product portfolios, current capacity and output, and their operating performance.

1. Nine Dragons Paper vs Lee & Man Paper: papermaking business layout path

Papermaking sits in the basic raw-materials segment of the national economy. It is a large-scale industrial activity marked by continuous, high-efficiency operations and notable economies of scale, and it remains closely tied to social progress and economic development. China's current papermaking leaders are Nine Dragons Paper (02689.HK) and Lee & Man Paper (02314.HK); their business layout journeys are outlined below.

1. Papermaking business layout and current operations

Product layout: a close match

Looking at core products, both groups cover paper and pulp categories, making them evenly balanced. On the paper side, Nine Dragons Paper's portfolio includes carton board, culture paper, corrugating medium, coated grey-backed white board and specialty paper; Lee & Man Paper offers kraft linerboard, white-top kraft linerboard, high-strength corrugating medium, coated white board and tissue paper. On the pulp side, Nine Dragons Paper produces wood pulp and recycled pulp, while Lee & Man Paper produces wood pulp and pulp board.

Capacity status: Nine Dragons Paper holds an edge

For annual papermaking capacity, Nine Dragons Paper led in 2020. Company disclosures show that by the first half of 2020, its papermaking capacity had reached 16.47 million tonnes and pulping capacity 853,000 tonnes. Its latest interim report put papermaking capacity at 17.57 million tonnes by the end of 2020. By the end of 2020, Lee & Man Paper's papermaking capacity was 6.53 million tonnes, tissue paper capacity 1.015 million tonnes, wood pulp capacity 180,000 tonnes and pulp board capacity 640,000 tonnes.

Note: Nine Dragons Paper figures are as of the first half of 2020; Lee & Man Paper figures are as of the end of 2020.

Papermaking output: Nine Dragons Paper produces more

Output followed capacity: from 2016 to 2020, Nine Dragons Paper's papermaking volume remained above Lee & Man Paper's. In 2020, Nine Dragons Paper produced 16.15 million tonnes, compared with 6.3021 million tonnes from Lee & Man Paper, putting Nine Dragons clearly ahead.

1. Papermaking performance comparison: Nine Dragons Paper has larger revenue; Lee & Man Paper shows stronger profitability

On operations, Nine Dragons Paper's operating revenue exceeded Lee & Man Paper's from 2017 to 2020. In the second half of 2020, Nine Dragons Paper generated revenue of 30.887 billion yuan, while Lee & Man Paper recorded about 13.163 billion yuan.

For gross profit margin, Lee & Man Paper outpaced Nine Dragons Paper from 2017 to 2020. In the second half of 2020, Nine Dragons Paper's gross margin was 22.22%; in 2020, Lee & Man Paper's gross margin was 20.90%. Overall, the margin gap between the two leaders has been narrowing.

Note: Nine Dragons Paper's fiscal year runs from July 1 to June 31 of the following year, while Lee & Man Paper's fiscal year runs from January 1 to December 31. Lee & Man Paper's revenue in Hong Kong dollars is converted into RMB at the annual average exchange rate. Nine Dragons Paper's 2020 gross margin is a second-half figure.

1. Forward-looking view: Nine Dragons Paper is China's "king of papermaking"

In papermaking, production capacity and output shape an enterprise's core competitiveness, while business results reveal its operating profile. Based on the analysis above, Forward Industry Research Institute considers Nine Dragons Paper the current "leader" among Chinese papermakers, given its advantages in capacity, output and revenue.

—This article is sourced from China Packaging Network (pack.cn). Original link: http://news.pack.cn/show-378333.html