main points
Enlightenment from excellent global specialty paper companies: Through reviewing the development history of Ahlstrom, Schweitzer Moody and GLT, we have summed up the five key elements for the success of specialty paper companies-emphasis on research and development, product diversification, flexible production conversion capabilities, and industrial chain Extended and strategically oriented mergers and acquisitions. Among the five core elements, research and development is the top priority. The research and development capabilities of specialty paper companies directly determine the number of subdivided paper types that companies can intervene in, that is, the breadth of products, and determine the ceiling for future expansion of companies; Competitiveness and market share, that is, product depth.
Domestic specialty papers have shown a competitive pattern of “clear strengths and weaknesses, and the strong will always be strong”: Through the comparison of static scale indicators and dynamic capital expenditure indicators, we believe that the current Chinese specialty paper industry has shown a clear pattern of strengths and weaknesses, namely Xianhe and Wuzhou It has formed a solid head position and is accelerating to widen the gap with peer companies. At the same time, compared with the leading international specialty paper companies, we believe that from the perspective of internal genetic attributes, Xianhe is most similar to the global specialty paper champion Austron, while Wuzhou is good at digging into subdivided tracks. The characteristics are similar to Schweizer Moody similar. We believe that Xianhe and Wuzhou are the two companies that have the best chance to represent China’s specialty paper industry and participate in global competition in the future.
European enterprises have the “Achilles heel”, and the time window for Chinese enterprises to go overseas has opened: Since 2013, the profit performance of overseas leading specialty paper companies has not been satisfactory, while the sales net profit margin of domestic specialty paper leading companies has been stable upward trend. The main reason for this situation is that domestic specialty paper companies have the upper hand in terms of labor costs, management efficiency and financial structure, so the expense ratio during the period is significantly lower than that of overseas specialty paper companies. However, Chinese companies failed to open up a significant gap with overseas companies in terms of gross profit margin. Although labor costs are superior, labor costs account for a relatively low proportion of production costs. Expensive shortcoming.
We believe that the Russia-Ukraine conflict in 2022 is pushing up the energy consumption costs of European specialty paper companies and weakening their global competitiveness. The global competitiveness of domestic specialty papers is rapidly improving. In the medium and long term, local leading enterprises will invest their main production capacity in the vast central and western regions of China, which will further reduce the labor and land costs of domestic specialty paper. Therefore, domestic leading specialty paper companies will receive further support in two important dimensions of raw material and energy consumption costs. We believe that 2022 is the starting point for Chinese specialty paper companies to participate in global competition. In the future, Xianhe and Wuzhou will no longer be limited to the domestic market, but will participate in the global market, and the growth pattern has become larger.
Is the fate of the specialty paper industry only “paper”? It has been proven at the industry level that if a specialty paper company uses wood fiber as a raw material, the product is a specialty paper, and if it uses non-wood fiber as a raw material, the product is a specialty material. There is a mastery of the plagiarism mechanism. As a specialty paper company, Ahlstrom’s filter media, non-woven products and fiber energy storage products have proved that specialty paper companies can evolve from “papermaking” to “manufacturing special materials” in the future, which will open up opportunities for domestic specialty paper companies. Room for more imaginative growth.
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