Shan Dong Sun Paper Industry Joint Stock Co Ltd

Sun Paper released its 2026 interim report. Total operating revenue was 20.862 billion yuan, net profit attributable to the parent company was 1.951 billion yuan, and net cash inflow from operating activities was 3.366 billion yuan. The latest asset-liability ratio was 47.85 percent, ranking 12th among peer companies that have disclosed data, up 0.18 percentage points from the previous quarter and up 1.84 percentage points from the same period last year. Gross margin was 15.66 percent, down 0.83 percentage points from a year earlier. Return on equity was 6.19 percent, and diluted earnings per share were 0.70 yuan. Total asset turnover was flat year on year. Inventory turnover was 3.08 times, down 0.23 times from a year earlier. The number of shareholders was 44,900, and the top ten shareholders held 53.07 percent of total share capital.

Industrial packaging paper, which uses waste paper as its main raw material, continues to strengthen, and Sun Paper and Jingxing Paper both posted varying degrees of growth in first-half results. Sun Paper reported first-half revenue of 20.862 billion yuan, up 9.15 percent year on year, and net profit attributable to shareholders of 1.951 billion yuan, up 9.60 percent. Second-quarter net profit attributable to shareholders was 1.045 billion yuan, up 16.84 percent year on year and 15.34 percent quarter on quarter. Jingxing Paper reported first-half revenue of 3.161 billion yuan, up 20.22 percent year on year, and net profit attributable to shareholders of 139 million yuan, up 152.95 percent. Second-quarter net profit was 118 million yuan, up 50.40 percent year on year and as much as 456.33 percent quarter on quarter. The two papermakers' quarter-by-quarter profit acceleration mainly benefited from industrial packaging paper. Jingxing Paper's industrial base paper business posted first-half revenue of 2.183 billion yuan, up 18.57 percent year on year. Sun Paper's corrugated medium and kraft linerboard revenue rose 292.01 percent and 35.54 percent respectively, while its cultural paper business was weak, with offset paper and coated paper revenue down 4.86 percent and 29.65 percent respectively. Since the start of the third quarter, cultural paper prices have remained near the bottom of the industry range, while industrial packaging paper prices are relatively high, and there are expectations for improvement as stockpiling for the Mid-Autumn Festival and National Day holidays approaches.

Sun Paper announced that the company plans to implement a forestry-pulp-paper integration quality and efficiency upgrade project at its Guangxi base Nanning park, with total investment expected not to exceed 5 billion yuan. The project will be carried out by its wholly-owned subsidiary Nanning Sun Paper Co., Ltd., and includes construction of an annual 500,000-ton unbleached chemical wood pulp production line, an annual 600,000-ton specialty paper production line, and related supporting facilities. The construction period is 18 months, with 40 percent of total investment planned to be completed by the end of 2026, and full investment and trial production to begin in the fourth quarter of 2027. The project aims to enhance the self-produced pulp capacity of the Nanning park, optimize the product mix, and form a dual-park driven synergistic development with the Beihai park, deepening presence in the southern market.

Nanning Sun Paper, a wholly owned subsidiary of Sun Paper, plans to donate 10 million yuan in cash along with household paper and other supplies to the Hengzhou Charity Federation. The donation is earmarked for emergency rescue and relief in flood-stricken areas of Hengzhou, relocation and settlement of affected residents, provision of basic living necessities, repair of damaged infrastructure, and post-disaster recovery and reconstruction. The donation will be funded by the subsidiary's own capital, will not affect the normal operations of the company's existing business, and will not have a material impact on the company's current or future operating performance.