Core Viewpoint - Xianhe Co., Ltd. plans to invest approximately 11 billion yuan in a new integrated high-performance paper-based material project in Luzhou, Sichuan Province, with an annual production capacity of 800,000 tons of bamboo pulp and 1.2 million tons of high-performance paper-based materials [1] Investment Details - The total investment for the project is around 11 billion yuan, with the first phase requiring about 5.5 billion yuan and the second phase also estimated at 5.5 billion yuan [1] - The second phase of investment will depend on the operational status of the first phase and will require a separate investment agreement to be signed [1]

Core Viewpoint - The company has signed an investment agreement for a new integrated bamboo pulp and high-performance paper-based materials project in Sichuan, with a total planned investment of approximately 11 billion yuan, aiming to produce 800,000 tons of bamboo pulp and 1.2 million tons of high-performance paper annually [2][3]. Investment and Expansion Plans - The project will be implemented in phases, with the first phase involving an investment of about 5.5 billion yuan to produce 400,000 tons of bamboo pulp and 600,000 tons of high-performance paper [3]. - The second phase will also require an investment of approximately 5.5 billion yuan, with similar production targets as the first phase [3]. - The company aims to achieve the first phase's production within three years from the start of construction, while the second phase will depend on market conditions and operational performance [3]. Financial Performance - In 2024, the company reported a revenue of 10.274 billion yuan, a year-on-year increase of 20.11%, and a net profit of 1.004 billion yuan, up 51.23% [4]. - However, the fourth quarter of 2024 saw a revenue of 3.01 billion yuan, a year-on-year increase of 28.6%, but a net profit decline of 33.7% [4]. - In the first quarter of 2025, the company experienced a revenue of 2.99 billion yuan, a year-on-year increase of 35.4%, but a net profit decrease of 12.1% [4]. Debt and Financial Pressure - The company's debt levels have been increasing, with a debt-to-asset ratio of 65.49% as of March 2025, up from 32.46% in 2020 [7]. - Long-term borrowings rose from 3.409 billion yuan in 2023 to 7.923 billion yuan in the first quarter of 2025, with interest expenses increasing significantly [7]. - The company has a short-term liquidity challenge, with cash on hand of 895 million yuan against short-term borrowings of 2.037 billion yuan [7]. Strategic Rationale for Expansion - The company is expanding based on national policies promoting the use of bamboo as a substitute for plastic and aims to reduce reliance on imported raw materials [5]. - The bamboo resource is renewable and aligns with environmental trends, with the first phase expected to generate an annual output value of 5.15 billion yuan and tax revenue of 450 million yuan [5]. - The company is focusing on high-performance paper-based materials to avoid market homogenization and strengthen its competitive advantage [5]. Financing Strategies - The company plans to finance the new project through bank loans, diversified financing, and operational cash flow from existing projects [8]. - It aims to enhance its debt repayment capacity through increased cash flow from the new projects and is expected to receive preferential treatment for green financing due to alignment with national strategies [8]. - The controlling shareholder plans to increase their stake by 300 million to 500 million yuan to boost market confidence [8].

Core Viewpoint - Xianhe Co., Ltd. plans to invest 11 billion yuan to establish an integrated high-performance paper base new material project using bamboo pulp, aiming to enhance production capacity and reduce reliance on imported raw materials [1][2]. Investment Details - The investment will be executed in two phases, with each phase costing approximately 5.5 billion yuan, leading to a total investment of 11 billion yuan [1]. - Upon completion, the project is expected to add an annual production capacity of 800,000 tons of bamboo pulp and 1.2 million tons of high-performance paper base materials, generating an estimated annual output value of 5.15 billion yuan and tax revenue of about 450 million yuan, while creating around 2,000 jobs [1]. Strategic Rationale - The investment aims to extend the industrial chain, achieve raw material self-sufficiency, and control costs, addressing the current dependency on imported wood pulp, which poses risks to cost management and supply chain stability [2][5]. - In 2024, the daily consumer series, which includes specialty paper, is projected to account for 47.05% of total revenue, highlighting the critical need for stable raw material supply [2]. Financial Implications - The total investment of 11 billion yuan represents 136% of Xianhe's net assets for 2024, with a current debt-to-asset ratio of 65.11%, indicating potential financial strain from large-scale financing [7]. - The company plans to finance the first phase of 5.5 billion yuan in batches, adjusting based on future demand and market conditions [7]. Market Conditions - The bamboo pulp production capacity utilization rate is expected to be only 85% in 2024, raising concerns about the feasibility of absorbing the new production capacity without facing impairment risks [7]. - Xianhe Co. faces competitive pressures from peers like Qingshan Paper Industry, which is also expanding its bamboo pulp capacity, potentially leading to increased price competition in the industry [7][8].

Group 1: General Information - Report Title: Pulp Daily Report [1] - Date: July 3, 2025 [2] - Research Team: Energy and Chemical Research Team [4] Group 2: Market Review and Operation Suggestions Market Review - SP2509 contract: Pre-settlement price was 5044 yuan/ton, closing price was 5072 yuan/ton, up 0.56% [7] - SP2601 contract: Pre-settlement price was 5230 yuan/ton, closing price was 5284 yuan/ton, up 1.03% [7] - SP2605 contract: Pre-settlement price was 5178 yuan/ton, closing price was 5234 yuan/ton, up 1.08% [7] - Shandong wood pulp market: Coniferous pulp intended transaction price range was 5220 - 6750 yuan/ton, with the low-end price stable compared to the previous trading day. Shandong Yinxing was quoted at 6100 yuan/ton [7] Operation Suggestions - Supply side: In May, the shipment volume of coniferous pulp from 20 major pulp-producing countries decreased by 8.2% year-on-year, and the cumulative decrease from January to April was 0.6% year-on-year. European port wood pulp inventory in May increased by 13.3% month-on-month and 22% year-on-year. China's pulp imports in May were 3.02 million tons, up 4.3% month-on-month and 6.9% year-on-year. As of June 26, 2025, the weekly pulp inventory in major regions and ports decreased by 3.49% month-on-month [8] - Demand side: Downstream paper mills' raw material procurement mentality remained cautious, mainly replenishing inventory at low levels for rigid demand [8] - Market outlook: The current port de-stocking speed is slow, the supply of imported wood pulp market is relatively loose, and with the expectation of new domestic production capacity, the improvement of the pulp fundamentals is limited, and it will operate in a low-range oscillation [8] Group 3: Industry News - On July 2, Xianhe Co., Ltd. announced an overseas investment. On June 30, 2025, the company signed an investment agreement with the People's Government of Hejiang County, Sichuan Province, for a bamboo pulp and paper integrated high-performance paper-based new material project. The total investment is expected to be about 11 billion yuan to build an 800,000-ton bamboo pulp and 1.2 million-ton high-performance paper-based new material production line and related supporting facilities. The project is planned in stages. The first phase will invest about 5.5 billion yuan, cover an area of about 2000 mu, and build a 400,000-ton bamboo pulp and 600,000-ton high-performance paper-based new material production line and related supporting facilities. The second phase will invest about 5.5 billion yuan, cover an area of about 2000 mu, and build a 400,000-ton bamboo pulp and 600,000-ton high-performance paper-based new material production line, corresponding supporting projects, and a bamboo forest base [9] Group 4: Data Overview - The report provides multiple data charts, including import bleached softwood pulp spot price in Shandong, pulp futures price, pulp futures-spot price difference, needle-broadleaf price difference, inter-period price difference, warehouse receipt volume, domestic main port pulp inventory, European main port wood pulp inventory, white cardboard and whiteboard price and price difference, copperplate paper and offset paper price and price difference, and US dollar to RMB exchange rate [15][17][19][26][28][30]

Core Viewpoint - Xianhe Co., Ltd. has signed an investment agreement for a bamboo pulp paper integrated high-performance paper base new material project with a total planned investment of approximately 11 billion yuan, aiming to enhance production capacity and resource utilization in the bamboo pulp paper industry [1][2]. Group 1: Project Overview - The project will be implemented in phases, with the first phase involving an investment of about 5.5 billion yuan to establish production lines for 400,000 tons of bamboo pulp and 600,000 tons of high-performance paper base materials [1]. - The project is located in the Linjiang New Material Industrial Park in Hejiang County, Luzhou City, Sichuan Province, benefiting from abundant bamboo resources and favorable geographical conditions [1]. - Upon completion of the first phase, the project is expected to generate an annual output value of approximately 5.15 billion yuan and provide around 2,000 jobs [1]. Group 2: Strategic Implications - The project is expected to improve the self-sufficiency rate of raw materials, reduce procurement and transportation costs, and enhance supply stability and cost control capabilities [2]. - Xianhe Co., Ltd. is actively expanding its high-performance paper base materials segment, responding to the trend of replacing plastic with paper and bamboo, and has launched several customized terminal products [2]. - The company has filed 73 patent applications in 2024, including 33 invention patents and 40 utility model patents, indicating a strong commitment to research and development [2]. Group 3: Broader Investment Context - In addition to the Sichuan project, Xianhe Co., Ltd. is also advancing two other major investment projects in Guangxi and Hubei, which are progressing according to plan and have begun production [3]. - The Guangxi project has already produced 100,100 tons of wood pulp and 28,900 tons of specialty paper in 2024, while the Hubei project has produced 93,400 tons of specialty paper and 59,800 tons of self-produced pulp [3]. - The multi-regional layout of Xianhe Co., Ltd. helps to mitigate regional risks and enhances overall competitiveness through resource differentiation and technology sharing [3].