出版单位：花旗
出版日期：2007.01.12
报告的名称：花旗--中国包装纸行业深度研究
文件的格式：pdf
页数：32页
语言：英文
介绍：

China Containerboard
Tightening Global Supply; Rmb Appreciation a Catalyst
 Recent share price correction — We believe that this has been due to overblown
concerns about new capacity and misunderstandings on the recent
environmental red card issue with Lee & Man Paper (LMP). We remain
optimistic about the China containerboard industry. We have upgraded Nine
Dragons (ND) to Buy/Low Risk (1L) from Hold/Medium Risk (2M) on upward
target price revisions and changed our risk rating to Low Risk. We have also
raised our target price for LMP to HK$22.8, from HK$21.3.
 US containerboard prices are still rising — Secular box demand in the US is
accelerating with the increasing importance of non-durable goods and
increasing box weights. Our US paper team thinks the softening dollar will likely
spur greater box demand and help push global containerboard prices higher.
Improving margins overseas have resulted in a valuation re-rating; US and
European peers now trade at a P/E of 18x from 16x a year ago.
 Industry consolidation — Citigroup Investment Research's paper team expects
that the top 10 producers worldwide will control 40% of global production
capacity, driven by M&A in North America and industry polarization in China.
Amid increasingly strict environmental controls, we project that the gradual
phase-out of small players in China will result in 1m capacity reduction per
annum.
 New capacity in 2007 and 2008 — This is not likely to change the undersupply
situation in China; we expect total new capacity in China to increase by a similar
tonnage amount compared with new local demand. We think that demand will
likely exceed projections due to strong economic growth. Tightening imports
supply would also help to digest new capacity.
 Faster Rmb appreciation — Citigroup Investment Research forecasts a
Rmb/US$ exchange rate of 7.33 by end-2007 and 6.89 by end-2008. Given that
ND and LMP both have more than 60% of revenue in Rmb and less than 30%
costs in Rmb, they would be direct beneficiaries. If the Rmb were to appreciate
3%, we estimate the FY07E EPS of ND and LMP would rise 5.8% and 4.2%,
respectively. Given its larger scale of operations, we believe ND would be more
sensitive to any Rmb appreciation.