When facing thousands of listed company announcements every day, which ones should you read? What are the key points to take away from the dozens or hundreds of pages of material announcements? Are the many professional terms in the announcements bullish or bearish? Check out Caixin's "Quick Read Announcement" column, where our reporters across the country will provide you with accurate, fast and professional interpretations on the night of the announcement.

On July 8th, Caixin reported that although the overall performance of the papermaking industry has been sluggish since the beginning of this year, the performance of segmented tracks such as specialty paper is outstanding. Two leading paper companies, xianhe co.,ltd. (603733.SH) and hangzhou huawang new material technology (605377.SH), are expected to perform well in the first half of this year.

On the evening of the 8th, xianhe co.,ltd. announced an earnings forecast. In the first half of 2024, the company expects to achieve a net profit attributable to the owner of the parent company of 0.54-0.57 billion yuan, an increase of 198.94%-215.55% year-on-year. Looking at the quarterly results, the net profit attributable to the parent in Q2 is expected to increase slightly QoQ and be between 0.271-0.301 billion yuan. In addition, hangzhou huawang new material technology has shown a trend of increasing performance quarter by quarter. The company expects to achieve a net profit attributable to the parent of 0.295-0.31 billion yuan in the first half of this year, an increase of 25.03%-31.38% YoY. Among them, the net profit attributable to the parent in Q2 is expected to be between ¥0.148 billion and ¥0.163 billion, slightly higher than Q1's ¥0.147 billion.

Compared with the past performance, xianhe co.,ltd.'s profit performance greatly exceeds the same period in 2022 and 2023, but there is still a gap from the peak of 2021. Overall, the company's performance shows obvious cyclicality. After experiencing the trough in 2023, this year's performance has rebounded significantly. In contrast, the performance of hangzhou huawang new material technology is more stable, and its performance has steadily increased in the past three years.

Since the beginning of this year, the overall performance of the papermaking industry has been sluggish. Under the pressure of high costs and weak demand, the average gross profit margins of major paper types such as cultural paper, white card paper, and living paper have all declined year-on-year. In this context, paper companies need to focus more on cost control to achieve performance growth.

Industry insiders believe that the growth of specialty paper mill companies is closely related to relatively low-priced pulp inventory. In addition, Caixin reporters noted that the sales model of specialty paper industry binding important customers also makes it less affected by demand-side drag in the current stage. It is worth noting that the sales model of binding important customers also means that when facing powerful downstream customers, the adjustment of specialty paper prices may lag behind the market situation. This was more obvious when pulp prices fluctuated greatly in the past two years, which to some extent affected the performance of manufacturers.

A research report from China Galaxy Securities said that the overseas demand for specialty paper is growing rapidly, and the overall supply-demand situation in the industry is better. Support by cost, specialty paper has the potential to increase in price. Hangzhou huawang new material technology has about 20% of its revenue from overseas, and its overseas business accounts for a higher proportion among domestic paper companies. In recent years, the company’s overseas business has increased rapidly. Xianhe co.,ltd. also stated in its earnings forecast that the company’s export market has steadily grown, bringing stable revenue.

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