Paper packaging not reverse thinking-Iota

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News > Dynamic industry > Paper packaging not reverse thinking

Paper packaging not reverse thinking

Consumer goods packaging industry is a shadow industry, due to a variety of reasons, from the beginning of last year, the relevant listed company has stood outlet. Although there is no technical barriers to the packaging industry, industry concentration is too low, but steady demand for the industry, especially the development of the Internet makes the packaging industry growing quickly, especially in the paper and packaging industry growth quickly. Predictably, some customers have the resources, technology and capital advantages of large packaging business, the future will become oligopolistic firms, continue to improve industry concentration through mergers and acquisitions is a high probability event (packaging industry mergers and acquisitions in recent years, constantly). Many in the paper and packaging industry enterprises above designated size, competition, industry average gross margin of 14%, sales profit rate of 5.8%. Paper packaging mainly domestic enterprises, less foreign. Listed companies: Hop Hing Packaging, MYS. For the performance of the two leading companies, we have to analyze why not reverse thinking? Now that the packaging industry is a shadow of consumer goods industry, then the analysis of the company's market performance can in turn be seen from downstream customers.
MYS why gross net profit to be higher than the Hop Hing Packaging?
MYS customers because there are a lot of multinational companies (the main customers are Samsung, Amazon, Ikea, ZTE customers high-grade), despite the growth of these giant companies unhappy, but body mass, strong profitability of their MYS Satisfaction will largely determine the value of the company. The co-packaging customers to domestic enterprises, customers despite rapid growth, but the quality and stability of earnings, but obviously not as good as MYS.
Business Model
Business model determines the distribution ratio of profits and packaging company with downstream customers. Now there are basically three kinds of packaging industry business model, corresponding to three different distribution of profits.
The first: the traditional model. The traditional business model under the company's focus is on packaging manufacturing sectors, to obtain orders from customers for production, get only the manufacture of this part of the profits. Hop Hing Packaging is one such model.
The second: packaging integration. Design, procurement, production, inventory, integration services, as further downstream industry chain, they are able to obtain greater profit distribution, higher gross margins. However, downstream customers to establish long-term stable cooperative relationship is very difficult. Customer acceptance before you, you can hardly get large orders, so it is easy to fall into the company's performance bottleneck is not growing. The most typical representative of MYS, fortunately these years stood electronics outlet, past performance is not satisfactory growth.
Third: symbiotic. Packaging business lines and business symbiosis, packaged as a part of its production, packaging business more like a department downstream enterprise customers, in this case, packaging companies are naturally deeper involvement of the downstream sides combined with a prosperity, a loss for both ties. Packaging company fully accompanied downstream business growth.
Their stock market performance
1, MYS: The main customers are Samsung, Amazon, Ikea, ZTE customers high-grade, high-speed growth of the downstream industry, the industry capacity of about 18.9 billion yuan, the company market share of about 6%, since the performance of the company for 12 years significant increase in revenue growth of 26.33% in 13 years, net profit growth of 62% (net cost increase resulting in declining fast), 12 began rising ROE, gross margin, net profit margin as the new base will enhance the capacity utilization of steady growth, management cash flow greater than net income, non-bank loans, is expected to grow 50 percent reporting the results down. Over the past three years, large-scale development of electronic products, but for the company's production capacity, the performance may be better. This year the company has access to ZARA, Harman, ZTE and other seven companies packaging supplier qualification (downstream customers are multinational corporations, multinational suppliers need to become a long certification process, but once inside its supply system, there stable source of orders). The company constantly looking for quality in the industry were the subject of merger integration, current company gradually involved alcohol, luxury goods, online shopping and e-label packaging services.
2, Hop Hing Packaging: CWB positioned as a low-end paper packaging (little and big sign cooperation), until positioned to service the electrical enterprises. About 20% of market share. 13 years ago because of the industry itself and rising property costs the industry can not effectively transfer, the company's gross margin has been declining, income does not increase profits, gross margin is far less MYS, but Hop Hing Packaging faster turnover, ROE slightly higher than the US YG, this year the company began to transition, trying to learn MYS to package direction of integration. M & A desire more intense, a lot of capital in recent years, is expected to grow 40 percent reporting the results down.

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