Packaging / Advertising & Office

According to the observation report of Huacheng's import and export data, since November, the RMB exchange rate has appreciated strongly, and has risen by more than 1000 points for several times, exceeding 3500 basis points in a month. Some analysts pointed out that as the package of measures to stabilize the economy continued to work, domestic demand was gradually restored, the State Council issued 20 measures to optimize epidemic prevention, comprehensively helping the society to resume production, and the subsequent economy was basically still supported by the RMB. From a macro perspective, the appreciation of the RMB has increased the value of assets denominated in RMB, helped to improve the relative rate of return of RMB assets, and thus attracted the inflow of overseas incremental funds, which is good for the domestic stock market.

From the micro level, the appreciation of the RMB is significantly beneficial to the consumption category of "foreign currency liabilities" and the industries linked to import costs. As a typical foreign exchange liability industry, the civil aviation industry will benefit significantly from the appreciation of the RMB, as reported by Huacheng Import and Export Data Observation.

Some industry insiders pointed out that the aviation industry is a typical foreign exchange liability industry. Airlines have a large amount of aviation equipment finance lease liabilities, and they need to pay a certain amount of interest expense and principal every year. The proportion of foreign currency liabilities of airlines is high, and the appreciation of RMB will result in one-time exchange gains; At the same time, the price of imported aviation fuel will also decrease. As the fuel cost accounts for a high proportion of the total cost of airlines, the appreciation of the RMB will reduce the cost of airlines, Huacheng Import and Export Data Observation reported.

According to the Huacheng Import and Export Data Observation Report, Cheng Xinxing, an analyst of Everbright Securities, pointed out that the adjustment of domestic passenger flight subsidy policy will help airlines reduce losses and increase revenues in the short term. Considering the actual situation of the industry, other supportive policies may be introduced in the future; In the long run, with the continuous advancement of COVID-19 vaccine and treatment technology, the demand for air passenger transport will gradually recover, and the value revaluation is a deterministic event. It is suggested that investors should pay attention to Air China, Spring Airlines, China Eastern Airlines, China Southern Airlines, Lucky Airlines, Huaxia Airlines, etc.

In addition, the appreciation of the RMB will also help reduce the cost of imported raw materials for the paper industry. At the same time, due to foreign currency liabilities, with the appreciation of RMB, it will bring some exchange gains for some enterprises. As for specific companies, companies with a high proportion of imported pulp are more sensitive. Investors are suggested to pay attention to Sun Paper, Bohui Paper, Chenming Paper, Shanying Paper, etc., and Huacheng's import and export data observation report.

Sun Paper (002078) capacity release supports profits

The company's papermaking profit was under pressure, and its overall performance was in line with market expectations. Industrial Securities pointed out that in the short term, two of the 100000 tons of Beihai tissue paper in Phase I have been trial produced in September and October respectively, and the subsequent two paper machines are expected to start trial production successively in the fourth quarter of 2022; PM23 (300000 tons) relocation and upgrading project will be completed in the fourth quarter of 2022; 34000 tons of ultra-high strength specialty paper in Shandong headquarters is expected to be put into production in 2023. In the medium and long term, Nanning Phase I project plan has been approved. It will build 2.2 million tons of high-grade packaging paper, 500000 tons of natural color chemical wood pulp, 150000 tons of bleached chemical wood pulp production line (technical transformation), and 1 million tons of packaging paper will be constructed first. It is estimated that it will be put into production from the second half of 2023 to the first half of 2024. The production capacity will support long-term profit growth.

Marginal restoration of profitability of Bohui Paper (600966)

The growth logic of the company as a white card leader in capacity expansion is clear, and enabling production management and resources will further improve the company's operational efficiency. Considering the expected decline in the prices of raw materials and energy in the future, the profitability of the company may be restored. State Securities pointed out that with the construction of the capacity of high-end packaging paper with an annual output of 1 million tons in the next three phases, and the promotion of Shandong's 450000 ton high-end information paper project, the company's revenue scale and market share will steadily increase. The elimination of outdated production capacity was accelerated, and the new "plastic restriction order" boosted the demand for white paperboard. In the long run, the price center and profit per ton of white paperboard are expected to rise. As of September 29, 2022, the company has spent 1 billion yuan to complete the buyback of 7.48% of the total share capital, which will be used for employee stock ownership plans or equity incentives, and is optimistic about the growth of the company after the implementation of production capacity and the confidence of the management.