China’s Listed Paper Sector in 2020: 31 Firms Post Stronger Earnings

In 2020, the COVID-19 pandemic spread worldwide, accelerating profound changes not seen in a century. Economic globalization faced headwinds, the global economy slumped, and international trade and investment contracted sharply. China’s economy moved through a three-stage response—stabilizing, safeguarding, and seizing opportunities—overcoming numerous difficulties. The industry remained broadly stable and healthy, becoming one of the first among major economies to return to positive growth. A new development pattern is taking shape, with domestic circulation as the mainstay and domestic and international dual circulation reinforcing each other.

After nearly three decades of rapid expansion, China’s paper industry has continued to scale up and has shifted from a shortage-based market to one that is basically balanced, with most products meeting domestic demand. Survey data from the China Paper Association show that about 2,500 paper and paperboard producers operated nationwide in 2020, with output of 112.6 million tonnes, up 4.60% year on year. Consumption reached 118.27 million tonnes, up 10.49%, while annual per capita consumption was 84 kg based on a population of 1.4 billion.

Between 2011 and 2020, paper and paperboard output grew at an average annual rate of 1.41%, while consumption grew at 2.17%. According to China’s National Bureau of Statistics, there were 4,184 above-scale paper products manufacturers in 2020, producing 68.6 million tonnes, down 4.97% year on year. Consumption fell 4.85% to 65.52 million tonnes, imports were 160,000 tonnes, and exports were 3.24 million tonnes. Over 2011–2020, paper products output and consumption posted average annual growth rates of 4.76% and 4.82%, respectively.

As a key basic raw material industry, papermaking occupies an important position in the national economy and touches many parts of economic activity. Its products serve numerous fields, including culture, education, science and technology, and other national economic sectors. As environmental measures and supply-side reforms advance, temporary and structural overcapacity in papermaking should ease significantly, and the supply mix will keep improving. Looking ahead, under a green and ecological development model, supply and demand in the paper industry are expected to tighten.

1. Overall Overview of Listed Companies

Based on the latest sector classifications of the Shanghai and Shenzhen stock exchanges, 31 listed companies with paper and paper products operations were active on the two exchanges by the end of 2020. The sector’s profitability indicators improved notably during the year. Safety awareness across the full industry chain—including integrated industry or service operations—and green environmental development concepts continued to strengthen, while the recyclable nature of the paper industry gained greater visibility in its public image.

1.1 Leading Enterprises Show Clear Advantages as Overall Operations Remain Stable

Despite a complex environment, the companies overcame many difficulties. Apart from a few poorly performing firms, overall results continued to improve steadily. The 31 listed companies had total share capital of 31.24733 billion shares, including 27.1859 billion unrestricted tradable shares (see Table 1). Total assets reached RMB 328.1 billion, a net increase of about RMB 15.4 billion from 2019, up 4.93%. Net assets stood at RMB 149 billion, a net increase of RMB 12.5 billion, up 9.18%. Main business revenue was RMB 185.3 billion, a net increase of RMB 20.5 billion, up 12.44%.

Net profit reached RMB 12.365 billion, a net increase of RMB 1.609 billion from 2019, up 14.96%. The average debt-to-asset ratio was 54.59%, down 1.77 percentage points from 2019 and effectively kept below the reasonable level of 60%. The average net sales margin in 2020 was 6.67%, 0.15 percentage points higher than in 2019.