Paper companies see bright prospects as demand increases
An increasing demand for tissue paper amid the COVID-19 pandemic means the future is looking bright for businesses in the paper industry.
An increasing demand for tissue paper amid the COVID-19 pandemic means the future is looking bright for businesses in the paper industry.
According to the Viet Nam Pulp and Paper Association (VPPA), in the first five months of the year, paper production was estimated at 1.85 million tonnes, up 7.8 per cent over the same period last year.
Paper exports reached 656,900 tonnes, up 97.4 per cent. Paper imports reached 853,100 tonnes, up 7.8 per cent over the same period in 2019. Packaging paper and tissue paper products all grew in terms of production, export and import.
In the tissue paper segment, domestic consumption and export demand surged by 40.2 per cent year-on-year due to the outbreak, offering opportunities for paper businesses with large production capacity.
Paper producer Dong Hai Joint Stock Company of Bentre (DHC) reported positive earnings in Q2 and in the first half of this year.
In the second quarter, the company recorded net revenue of VND649 billion (US$28 million), 2.8 times higher than the same period last year. Post-tax profit was nearly VND79 billion, up 212 per cent compared to the second quarter of 2019.
Over six months, DHC achieved net revenue of VND1.3 trillion, 3 times higher than the same period in 2019. Post-tax profit was VND168 billion, up 3.5 times from 2019.
The company’s Giao Long Paper Factory phase II holds advantages in both scale and production capacity of kraft paper and carton packaging, giving DHC a competitive edge over its competitors.
Besides, with a large market share of the packaging segment for the seafood, garment and pharmaceutical industries, DHC is forecast to continue to achieve strong growth in the last two quarters of the year and beyond as demand rises.
Hapaco Group JSC (HAP) has recently announced investment plans to expand its tissue paper production lines. The new project is expected to improve the company’s business efficiency in the future. The plan has boosted the price of HAP on the stock market, reaching its ceiling prices in the past 12 trading sessions.
Shares in Viet Tri Paper Joint Stock Company (GVT) and Vien Dong Investment Development Trading Corporation (VID) have also increased strongly recently thanks to information on revenue and profit growth, along with planned projects to invest in high capacity paper production.
At its 2020 AGM, GVT approved a plan to invest in new packaging paper production lines. Its leaders targeted to increase the company’s productivity to 150,000 tonnes per year.
In 2019, GVT's post-tax profit increased 91 per cent to reach nearly VND72 billion. In 2020, has GVT set a minimum revenue target of VND1.2 trillion and profit target of VND80 billion, an increase of about 11 per cent for both compared to 2019.
For printing and writing paper production, production growth in the first two quarters of this year decreased compared to the same period in 2019. But according to the Viet Nam Pulp and Paper Association, the demand for printing paper and writing paper would grow again in the third quarter of 2020.
The production and export of books and notebooks will also increase again when pupils and students go back to school after the summer holidays.
This is good news for companies in this segment including Bai Bang Paper Company, Viet Nam Paper Corporation and other member companies. — VNS
