The hottest paper industry will face greater reces

Zhenglong paper industry: it will face greater recession risk in the second quarter

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core tip: Zhenglong, a large paper mill, held an online legal meeting. Cai Donghe, general manager, said that the first quarter of 2020 was slightly better than the same period last year, but the COVID-19 may impact the global economy, demand and logistics

Zhenglong, a large paper mill, held an online legal meeting, Cai Donghe, general manager, said that the first quarter of 2020's operation performance was slightly better than that of the same period last year, but the COVID-19 equipped with a special sample delivery device for automatic feeding may impact the global economy, demand, logistics and raw material costs. At present, the operation in May and June is slightly bearish, and it is expected that the impact on the second quarter can be controlled within 10%, and the revenue in the first half of the year will strive to be flat in the same period last year

Cai Donghe said that the production in Taiwan and Vietnam was not affected in the first quarter. Only Chinese Mainland had some interference due to the delay in the resumption of work. Fortunately, it did not have much impact on the group's first quarter revenue and production and sales. In the first quarter of 2020, the self settled consolidated revenue was 9.133 billion yuan, still an annual increase of 0.15%, and the self settled gross profit margin was also better than the same period last year. The adverse impact of the epidemic on operations was quite small

Cai Donghe pointed out that among the three major products of industrial paper, paper utensils and household paper, household paper had the strongest momentum in the first quarter. Due to strong market demand, household paper still maintained full capacity and actively worked overtime. From January to April, household paper revenue increased by more than 1/3 annually. The sales of tissue and paper containers were also stable, with a slight increase in revenue in the first quarter

however, Cai Donghe's view on the operation of Zhenglong in the second quarter tends to be conservative, mainly because with the global spread of the epidemic, the price of imported raw materials of pulp and waste paper increases, and cross-border transportation such as shipping is also less smooth. Affected by this, although the current situation is unknown, it is expected that the global boom and demand may decrease from May, affecting the group's operating costs, export prices and demand, and temporarily bearish on operations

Cai Donghe expects that the demand for household paper may slow down slightly from May, and the revenue of household paper in the second quarter is still expected to grow slightly compared with the same period last year. Affected by the export market, it is also expected that the demand may be slightly resolved from May, and there will be a recession in the fusion line. The revenue is estimated to decline slightly compared with the first quarter, and the expected impact can be controlled within 10%. The group's revenue in the first half of the year is estimated to be flat or slightly lower than that in the same period last year

Cai Donghe pointed out that Zhenglong is currently promoting investment and construction plans in Taiwan and Vietnam. Due to the impact of the epidemic on cross-border flows and related conferences, it can only be replaced by video conferences, and the related inconvenience is still expected to affect the progress of subsequent projects. It is hoped that the epidemic will end as soon as possible so that the project can be completed as scheduled

in terms of the price of waste paper, Cai Donghe said that at present, Taiwan and imported waste paper are half and half. Due to the obstruction of the recycling and logistics system due to the epidemic, the price of imported waste paper has increased significantly recently, from about US $100 per ton in the past to US $180 per ton. In order to maintain the same color as the whole vehicle, it requires a high technical requirement of RMB. It is expected that the production cost will begin to be affected from June. In this regard, it will be prudent to try to reduce the impact on gross profit by converting 2G absolute dry pulp into slurry volume

in Chinese Mainland, the price of waste paper raw materials and industrial paper fluctuated violently, making the price of paper utensils quite unstable. Cai Donghe said that Zhenglong currently provides 2/3 of the paper materials from Taiwan and 1/3 of the local supply. The proportion of paper supplied from Taiwan and purchased locally will be adjusted according to the market conditions. The impact is relatively small. At present, it pays more attention to receiving orders and accounts, and the situation is still under control