Lee & Man Paper: Consumer demand is set to be unleashed in China, a more promising pace for paper making in 2023

Lee & Man Paper: Consumer demand is set to be unleashed in China, a more promising pace for paper making in 2023

- Will adopt effective strategies to develop its tissue paper business in line with market and customer demand
- Fourth paper-making machine to commence in Malaysia with 350,000 tons of packaging paper
- The Group also believes that consumer demand is set to be unleashed after a long period of suppression, leading to a rebound in the paper manufacturing industry

The Pulp and Paper Times | July 2023

Against the backdrop of the impact of COVID-19 pandemic, geopolitical tension and other factors, global economic growth continued to slow down in 2022. Dragged by the pandemic and the sluggish consumer sentiment in the Mainland China, the demand for packaging paper remained weak with price slipping lower, but the prices for pulp and other raw materials surged as the result of the Russo-Ukrainian War, which further squeezed the profitability of paper manufacturers. Under the pressure of high pulp prices, some of the paper manufacturers voluntarily suspended or reduced their production.

For 2022, Lee & Man Paper Manufacturing Limited recorded total revenue of HK$29.2 billion, representing a decrease of 10% from that of the previous year, while the profit for the year decreased by 60% to HK$1.3 billion as compared with that for the  previous year.

Giving the China Paper Industry review, Lee & Man Paper’s Chairman, Dr. Lee Man Chun Raymond, said. “In the face of changes in market supply and demand and policy adjustments, the Group pro-actively expanded its pulp business and rationalized its raw material allocation in order to mitigate the impact of rising raw material costs on our profitability. The Group also believes that consumer demand is set to be unleashed after a long period of suppression, leading to a rebound in the paper manufacturing industry. Therefore, the Group insisted on expanding the scale of production of its existing business, including the addition of new production lines at its plants in Jiangxi province and Chongqing and the plan of building a new pulp mill in Guangxi province, with a view to further enhancing the resilience of its operations and laying a more solid foundation for its long-term development by increasing production capacity and rationalizing cost control”

Dr Lee further added, the Group continued to support the “Belt and Road” initiative by expanding its business presence in Southeast Asia and grasping opportunities in overseas markets. During the year, the Group’s production bases in Vietnam and Malaysia operated smoothly with satisfactory business performance. The production line of the third paper-making machine at our Malaysian plant commenced production in the third quarter of 2022, adding an annual production capacity of 350,000 tons of packaging paper.

“After the PRC government optimized its anti-pandemic policy in last December, measures to increase investment, boost consumption and promote innovation were introduced in various provinces so as to support economic stability and progress in 2023. With the increase in industrial and consumer activities, the paper manufacturing industry is expected to recover at a more promising pace in the second half of the year, leading to a cautiously optimistic outlook. The Group will continue to expand its industrial chain in order to diversify its paper and pulp business so as to reduce the pressure of rising raw material costs, respond flexibly to market demand for various products and further enhance our operational efficiency” He said.

Dr Lee further informed about the group’s expansion plan, he added, “Packaging paper remains the Group’s core business. With the tightening control on plastic packaging material in the Mainland China, we see much of growth potential for packaging paper as an excellent alternative to plastic packaging material. As the popularity of online shopping grew during the pandemic, demand for packaging paper is expected to pick up upon the implementation of the post-pandemic consumption stimulation measures. The Group will continue to expand its coverage of the production capacity to enhance its profitability. The Group adds pulp production lines at its plants in Jiangxi province, Chongqing and Guangxi province which are expected to be completed in the second, third and third quarters of 2023 respectively, adding a total annual production capacity of 950,000 tons. For our overseas operation, the production line of the Group’s fourth paper-making machine in Malaysia will commence operation in the second quarter of this year, with an annual production capacity of 350,000 tons of packaging paper”

Regarding the tissue paper business, the Group has endeavored to improve the quality of consumer tissue paper. The Group produces natural bamboo unbleached tissue in order to satisfy the needs for health and environmental protection. The Group’s total annual production capacity of consumer tissue paper has reached approximately 1,000,000 tons, and will adopt effective strategies to develop its tissue paper business in line with market and customer demand.

The Group is committed to providing quality products at reasonable price while also fulfilling its corporate social responsibility by reducing pollution and carbon emissions through waste paper recycling and advanced production technologies, thereby bringing more environmentally friendly products to customers. In the long term, the paper manufacturing industry still has tremendous room for development. The Group will seize opportunities to expand its market and maintain competitiveness in the paper manufacturing industry.
 

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