Nine Dragons Paper is set to reach a production capacity of 25.37 million tpa, laying a solid foundation for further strengthening its market competitiveness

Nine Dragons Paper is set to reach a production capacity of 25.37 million tpa, laying a solid foundation for further strengthening its market competitiveness

- The Chinese economy faced the triple pressure of shrinking demand, supply shocks and weakening expectations with a sustained weakness in consumer confidence.
The Pulp and Paper Times

One of the largest paper manufacturing group worldwide, Nine Dragons Paper (Holdings) Limited has achieved a revenue of approximately RMB59,496.4 million for FY2024, representing an increase of approximately 4.9% as compared with FY2023. The major contributor of the Group’s revenue was still its packaging paper business, including linerboard, high performance corrugating medium and coated duplex board, which accounted for approximately 91.8% of the revenue, with the remaining revenue of approximately 8.2% generated from its printing and writing paper, high value specialty paper and pulp products.

The Group’s revenue for FY2024 increased by approximately 4.9% as compared with FY2023, resulting from the net effect of the increase in sales volume of approximately 18.3% and the decrease in average selling price of approximately 11.4%. Revenue of linerboard, high performance corrugating medium, coated duplex board and printing and writing paper for FY2024 accounted for approximately 55.5%, 22.6%, 13.7% and 6.9% respectively of the total revenue, compared to 49.5%, 25.5%, 15.0% and 8.3% respectively in FY2023.

During the year under review (FY 23-24), the Chinese economy faced the triple pressure of shrinking demand, supply shocks and weakening expectations with a sustained weakness in consumer confidence, which restrained the rebound of sales in the packaging paper industry to a certain extent. Meanwhile, the overall domestic supply of packaging paper continued to increase, posing notable downward pressure on paper prices. Besides, high interest rates in the United States and the weakening of the Renminbi, coupled with the continued expansion of production capacity by the peers and the continued increase in imported paper further added pressure on supply, putting the packaging paper industry under constant stress.

Nine Dragons Paper proactively responded to these difficulties and challenges by pursuing progress amidst stability and promoting stability through making progress. Leveraging its excellent product quality and diverse product portfolio, the Group has a large, stable and diversified customer base, which contributed to the Group’s significant year-on-year growth of 18.3% in sales volume and its year-on-year increase of 4.9% in revenue to RMB59,496.4 million for the year. 

“We optimized the raw material structure, kept a close tab on the supply and prices of raw materials, and implemented refined production and sales management, inventory management and a range of cost reduction and efficiency enhancement measures to effectively strengthen the operating efficiency and cost control capabilities, thereby significantly improving the profitability of the Group. Recording a substantial year-on-year growth of 273.2% in the gross profit and significant year-onyear growth of 6.9 percentage points in the gross profit margin, we successfully navigated across the cycle and registered a turnaround from loss to profit during the year. In addition, we further improved the risk management system and kept working capital, cash flow and exchange rate fluctuation risks to minimum levels, solidifying the high-quality sustainable development of the Group,” the annual results report stated.

During the year, a number of the Group’s capacity expansion projects for paper production and raw materials have started production as scheduled. Among which, the new base in Beihai, Guangxi Zhuang Autonomous Region was also officially put into operation, which further expanded the Group’s market coverage. As of 30 June 2024, the Group’s total design production capacity for fibre raw materials amounted to 5.14 million tpa (wood pulp of 2.38 million tonnes, recycled pulp of 0.70 million tonnes and wood fibre of 2.06 million tonnes), and the total design production capacity for paper amounted to 21.67 million tpa, while the total annual design production capacity for downstream packaging plants amounted to 2.86 billion sq.m.

The Group’s annual design production capacity in packaging paperboard, printing and writing paper, and high value specialty paper and pulp products as at 30 June 2024 was approximately 24.8 million tpa in aggregation, comprising approximately 13.4 million tpa of linerboard, approximately 3.7 million tpa of high performance corrugating medium, approximately 2.6 million tpa of coated duplex board, approximately 1.7 million tpa of printing and writing paper and approximately 3.4 million tpa high value specialty paper and pulp products. The four US mills capacity was approximately 1.3 million tpa, including approximately 0.9 million tpa of coated one-side, coated freesheet and coated groundwood grade for printing and writing paper and specialty paper products; and approximately 0.4 million tpa of recycled pulp and wood pulp.

Capacity Expansion Plan

Leveraging the significant advantages of vertical integration of the supply chain resources, which include high-quality and sustainable raw material supply, an efficient paper production capacity and the synergy with downstream packaging business, the Group has been taking steady and progressive steps to push forward the strategy of integrated pulp and paper production. Aside from adding a production capacity of 3.05 million tonnes for wood pulp in Beihai, Guangxi Zhuang Autonomous Region and Jingzhou, Hubei Province, the Group also pressed on with capacity expansion projects for paper production in respect of bleached folding boxboard and printing and writing paper with a total production capacity of 3.70 million tonnes in Beihai, Guangxi Zhuang Autonomous Region and Jingzhou, Hubei Province. Upon completion of the above projects, the Group’s total design production capacity for fibre raw materials will reach 8.19 million tpa (wood pulp of 5.43 million tonnes, recycled pulp of 0.70 million tonnes and wood fibre of 2.06 million tonnes), and the total design production capacity for paper will reach 25.37 million tpa. These projects would lay a solid foundation for further strengthening the Group’s market competitiveness as well as improving its structural profitability in the future, reinforcing steady growth of the Group amidst the complex and volatile market.
 

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