Hexing Packaging H1 2021: Hubei Base Tops Revenue, Hefei Base Leads Net Profit

Hexing Packaging maintained growth in H1 2021. Its 2021 Semi-Annual Report shows revenue of RMB 8.214 billion for the reporting period, a 72.39% year-on-year increase, while net profit attributable to the parent company reached RMB 151 million, up 9.17%.

(Hexing Packaging H1 financial data, unit: yuan)

Which production base generated the biggest revenue? Which one delivered the strongest net profit?

The semi-annual report identified its major subsidiaries and equity-participation companies that contributed 10% or more to net profit. Four entities were named: Hubei Hexing Packaging & Printing Co., Ltd., Hefei Hexin Packaging Co., Ltd., Fujian Hexin Packaging Co., Ltd., and Xiamen Shikaiwei Packaging Industry Co., Ltd. The following review is based on the disclosed figures for revenue and profit rankings.

(Subsidiaries affecting Hexing Packaging's net profit by 10% or more, unit: yuan)

On revenue, Hubei Hexing Packaging & Printing Co., Ltd. led with RMB 484 million; Hefei Hexin Packaging Co., Ltd. followed with RMB 419 million; Fujian Hexin Packaging Co., Ltd. and Xiamen Shikaiwei Packaging Industry Co., Ltd. ranked third and fourth with RMB 331 million and RMB 250 million, respectively.

On net profit, Hefei Hexin Packaging Co., Ltd. took first place with nearly RMB 30 million; Fujian Hexin Packaging Co., Ltd. ranked second at RMB 22.2987 million; Hubei Hexing Packaging & Printing Co., Ltd. and Xiamen Shikaiwei Packaging Industry Co., Ltd. were close behind, ranking third and fourth with RMB 18.6425 million and RMB 16.5216 million.

As a group, the four packaging companies are sizable: each posted more than RMB 200 million in H1 revenue, and full-year revenue is expected to at least double. Hubei Hexing Packaging & Printing Co., Ltd., a leading paper packaging player in Hubei, is likely to surpass RMB 1 billion in full-year revenue. Hefei Hexin Packaging Co., Ltd. follows closely and should not be far from the RMB 1 billion mark for the full year.

Net profit margins across the packaging sector remain generally low

Given the traditional manufacturing nature of the business, along with rising raw material costs and intensifying competition in H1, the four Hexing Packaging subsidiaries focused on corrugated board and cartons all recorded net margins below 10%. Even so, that level remains respectable across the carton packaging industry.

At an earlier industry symposium, the head of a Hunan packaging company said its plant's H1 revenue rose but net profit fell sharply. A Zhejiang paperboard producer faced a similar situation; its executive estimated a full-year profit margin of only three to five percentage points, with losses in some H1 months, and said it remained to be seen whether the second half could recover the shortfall.

The takeaway is that in 2021, with the pandemic largely under control, packaging companies generally returned to or exceeded their 2019 revenue levels, yet net profit continued to be squeezed by surging paper prices and end customers that were hard to pass costs on to.

This is the challenge facing the packaging industry, and the broader real manufacturing sector. As Q4 arrives, the hope is that end-consumer demand will recover quickly and the peak season will be stronger, giving packaging companies—already capital-intensive with thin returns—some relief.

—This article is reprinted from China Packaging Network (pack.cn). Original link: http://news.pack.cn/show-378182.html