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Lee & Man Paper focuses on pulp-making and waste paper recycling to ensure stable raw material supply

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Lee & Man Paper's future course of action

Lee & Man Paper focuses on pulp-making and waste paper recycling to ensure stable raw material supply

The Group will actively expand its recycled pulp business in Southeast Asia to replace imported waste paper and also strengthen raw material allocation to maintain its production cost advantage.

Hong Kong, 4 August 2021

In the first half of 2021, the COVID-19 pandemic situation remained volatile. Although various measures were introduced to boost economies around the world, the pace of recovery has been uneven, and rising inflation has increased expectations for interest rate hikes, hindering global economic growth. China’s paper manufacturing industry not only faced an uncertain macro environment, but also other challenges such as rising pulp prices, tight supply of waste paper raw materials, and social transformation into a green economy, resulting in increasing pressure on operations. Followed the recovery of the COVID-19 in China, the Group’s total revenue for the six months ended 30 June 2021 increased by 37.1% to HK$15.2 billion as compared to the same period of last year. Resulted from the economies of scale and cost advantages, the profit for the period increased by 42.8% to HK$2.0 billion as compared to the same period of last year.

Dr Raymond Lee, Chairman of Lee & Man Paper, said, “With China starting her ’waste ban’ in January 2021, solid waste, including waste paper, can no longer be imported. Because of the limited supply of waste paper in the Mainland, the prices of raw materials have risen. In addition, as international shipping has been restricted due to the pandemic, transportation costs have skyrocketed, which further squeezed the industrial margin. On the demand side, the ‘Plastic Restriction Order’ has fueled the ‘replacing plastic with paper’ trend, which along with the recovery of consumer market demand and accelerating industrial production, has pushed up demand for paper products. Under relatively tight supply, the paper manufacturing industry has faced rising prices. In response to changes in the market, the Group has continued to consolidate upstream resources and develop a business model with a vertically integrated industrial chain that covers pulp-making and waste paper recycling to ensure it has access to stable raw material supply. At the same time, we have continued to expand the scale of our operation, to control costs and bolster production capacity, giving the Group what it takes to deliver yet better performance.”

                     

The Group focuses currently on developing various types of linerboard, corrugating medium, coated duplex board and tissue paper, putting intensive effort on catering to the needs of customers in different market segments. For its major focus tissue paper business, the Group has established an integrated product chain that can help improve the quality of consumer tissue paper and has also boosted the scale of tissue paper production. The Group produces natural bamboo unbleached tissue to satisfy the need for health and to protect the environment of the society as well as consumption requirement. The Group's tissue paper business has maintained steady growth and can put out about 900,000 tons of tissue paper annually. The Group will watch closely the needs of the market and customer demand and continue to adopt effective development strategies for the business.

Packaging paper business is the core business of the Group. With the boom of online consumption prevailing in China and overseas, market demand for quality packaging paper has also been surging. That, coupled with the plastic restriction order effective in China, is favorable for the Group’s packaging paper business. The Group will actively expand its recycled pulp business in Southeast Asia to replace imported waste paper and also strengthen raw material allocation to maintain its production cost advantage. The second paper-making machine with an annual production capacity of 350,000 tons in the Malaysian plant started production in April this year. In addition, the Group invested in expanding its paper-making business in Cambodia during the period .

Mr Edmond Lee, Chief Executive Officer of Lee & Man Paper, concluded, “Looking ahead, the Group will continue to optimize its industrial chain as well as diversify its paper and pulp business actively, strive to enhance operational stability and strengthen its profit base. The Group will also support the ‘Belt and Road’ initiative, targeting Southeast Asian markets to realize international development, and ensure local resources are used well to optimize operational efficiency. In the future, the Group will continue to explore business opportunities in countries and cities along the Belt and Road. We are confident of the long-term development of the paper manufacturing industry in the region, thus we will seize new opportunities going forward to expand our markets and sharpen our competitive edges in the paper manufacturing industry.”


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