RMB appreciation + market supply and demand warming favorable papermaking sector

Recently, the renminbi has restarted a new round of appreciation. It is expected that the appreciation of the local currency will be a trend in 2011. The appreciation may be around 3%. The appreciation will be a good stimulus for papermaking. From the perspective of reducing costs, the company will increase its gross profit margin and profitability. Will become an important catalyst in the industry. The fundamentals of the industry also support the performance of the stock price. The papermaking enterprises can pass on their own costs smoothly in the stage of cost increase. Under the background of the raw material inventory buffer, the profit will maintain steady and rapid growth. We noticed that the number of imported wood pulp in the company increased significantly in November and December, while the price of wood pulp imported fell, which indicates that the company's cost in the first quarter will remain low. It is expected that corporate profits will remain at a high level in the first and second quarters.

In the context of the resumption of the appreciation of the local currency, investment opportunities in papermaking enterprises have always existed. In 2011, it is recommended to have cost advantages and production capacity. In 2011, the supply and demand trend of the industry is better, and the paper price can be steadily improved. In 2011, the production capacity of the enterprises became our focus. Focus on the target, but also optimistic about companies with resource advantages. From the overall performance of the industry, the performance of the papermaking sector in 2010 increased significantly year-on-year, but the growth rate gradually declined. The paper industry's fourth quarter of 2010 is higher than the third quarter, which is basically close to the high point of the year. In addition, new capacity and elimination of backward production capacity are the main focus in 2011, and the result of the game will be the winner of the dominant company.

In addition, the country's continued elimination of backward production capacity of papermaking will continue to improve the supply and demand structure of the industry; industry leaders will benefit, and the market should maintain close attention.

(Article source: China Securities Network)

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