RMB appreciation positive paper or into a tasteless Forest

According to Customs Department web site statistics show that China’s paper-making raw materials earlier this year, import prices go up.

Some experts think that the Chinese paper industry, because most of their production in order to import the main elements of the RMB appreciation will reduce the costs of their imports, thereby improving its profitability. However, another expert said that this is only short-term effect, establish a complete industrial chain is long-term strategy.

Forestry or forestry-paper integration enterprise entangled into a «chicken ribs»

The recent appreciation of the RMB is expected to approaching Querang paper integration is a tangle of small businesses. Hunan 1, surnamed Wang, told reporters reflect business leaders, with the prices of raw materials overseas, the decline in forestry resources in their hands not only can not be dominant, and have actually become the occupation of liquidity «superfluous.» Recently, the company is a tangle, has been whether to sell to buy pulp forest arguing over, is that the current ratio of trees with its own cost-effective home-made paper pulp. However, some executives are opposed to selling the company to buy pulp forest, they believe, in the long run is scarce forest resources, have the effect of hedging and risk prevention.

Recalling a month ago, with the continued tight global supply of wood pulp, together accounting for global market pulp production capacity of 8% of the Chilean earthquake struck suddenly, and the impact of the strike, Finland, March 9, the world’s major market pulp prices have the previous week were up 2.2% to 2.6%. Which the U.S. market NBSK price has reached 900 U.S. dollars / ton in July 2008 exceeded the maximum price of 892 U.S. dollars / ton, a new high for the past ten years. However, this did not affect the body such as stocks of Yueyang Paper recommended rating, the reason is they have a wealth of upstream forest resources.

In fact, the RMB appreciation impact on all sectors different things, even the same industry, different companies are very different. According to company analysis, the proportion of imported raw materials from the point of view, China and Thailand share (16.76,0.25,1.51%), large number of major import requirements; from imported equipment required in the future to see estimated Chenming Paper Machinery imported for the next few years larger number. «Some analysts believe that 4% revaluation of the RMB, China and Thailand will save the company shares the cost 28.56 million yuan, to increase the company EPS0.04 dollars. And Chenming Paper Company can reduce procurement costs of about 56.34 million yuan. The Yueyang Paper the basic raw material industries rely on self-enterprise, small changes in cost also has.

Recently, the performance of various listed companies, market analysis should also be positive above. For individual stocks, the main rely on imported raw materials or equipment such as China and Thailand share and Chenming Paper Company stocks across the board gains across the board last Friday. Yueyang Paper Co. owned forest farms and so can not benefit. Stock price movements from the point of view, these stocks really flat.

In this regard, some analysts believe that falling because the cost of importing pulp to sell to buy pulp forest enterprises are few and mostly small and medium enterprises, because the small amount of money, if not to sell forest, working hard to come finance chain fear. For SMEs the forest, or «tasteless», but for large enterprises, is «chicken,» he has forest will not only controlled by others.

Significant drop in overall import cost of good paper industry

Paper industry is a large use of foreign exchange, experts predict that if the 5% revaluation of the RMB can be directly cost 1.1 billion yuan, if the value-added tax and other factors into account, costs close to 1.4 billion. Considering only the appreciation of the renminbi on the raw material costs, RMB appreciation could cost 2% less 0.51%, gross margin increased 3.01%, total profit increase of up to 8.79%. Clearly, the RMB appreciation on paper very favorable business.

Insiders pointed out that the yuan appreciation would reduce the cost of importing pulp and waste paper, wood pulp and waste paper to imported raw materials business for the benefit significantly. Composition of production costs in the paper to wood pulp as the main raw materials companies, the proportion of wood pulp accounts for about 65% of production costs to 75%. As the main raw material for paper companies, paper accounts for about 50-70% higher than production costs. In China, the paper industry about 80% of the wood pulp and waste paper to rely on imports, especially coated paper, LWC, white cardboard high-grade paper production.

In addition, most domestic imports a large machine, the yuan strengthen purchasing power, lower cost of imported equipment. Some analysts said the paper industry investment in fixed assets is about 60% of equipment investment, and most are imported paper machine, the RMB appreciation will result in corresponding decline in prices of imported equipment and reduce the paper-making class companies to import equipment procurement costs.

However, the century is that securities analysts, plate impact both advantages and disadvantages, but on paper the printing industry, the role of performance for the revaluation of the RMB is not very clear. Because the cost of imported raw materials, appreciation of the RMB down, but exports will also suffer exchange losses.

Only short-term positive appreciation of complete industrial chain is benevolent

With the global economy improves, gradually pick up the paper industry also promoted the increased demand for pulp, in order to stimulate pulp prices. Worldwide, the final paper is «sacrifice» increasingly scarce forest resources at the cost of long-term price increases are inevitable. For my country, even though their purchasing power increase after the revaluation, but may be faster after pulp prices.

Shandong Sun Paper Publicity leader Wang Feng said the company nearly 60% of the raw material comes from imports, the RMB appreciation on Sun Paper is good news, but the company will further increase its forest resources, establish a complete industrial chain, so will not be subject to the international market.

Paper plates generally rose on the recent phenomenon, SW, Golden State securities analysts agree that this is not entirely affected by the appreciation of the RMB. They recommend Sun Paper, Yueyang Paper Company and other integrated pulp and paper. This is due to the timing and scope of renminbi appreciation of uncertainty, the paper industry may be short-term positive, but has a complete industrial chain, with the capacity to expand long-term investment potential of the company is the best target.