Text · Reporter Su Ling
State-owned Assets Report Magazine Issue 4, 2024
Papermaking is one of the four great inventions of ancient China. This "high-tech industry" 2,000 years ago is now facing the new issue of how to build a modern industrial system. This is a fully competitive industry that is deeply integrated into the international market and has strong cyclical characteristics. As the only second-level central enterprise with the production, development and utilization of forest pulp and paper as its main business, China Paper Investment Co., Ltd. (hereinafter referred to as "China Paper"), a subsidiary of China Chengtong, has taken the initiative to seek change, integrity and innovation in recent years, and has struggled to survive in the cold winter of the industry. Yueyang Forest Paper Co., Ltd. (hereinafter referred to as "Yueyang Forest Paper"), a subsidiary of the company, has become a "benchmark" in the "Double Hundred Enterprises" selection of the State-owned Assets Supervision and Administration Commission of the State Council for two consecutive years, and Guangdong Guanhao High-tech Co., Ltd. (hereinafter referred to as "Guanhao High-tech") has also obtained the "Benchmark" rating of "Science and Technology Reform Enterprise" in 2023. How can traditional industries develop new quality productivity? How can central enterprises become stronger and better in a fully competitive industry? How can manufacturing companies optimize market value management? How can the factories along the Yangtze River live up to the earnest entrustment of "guarding the clear water of the Yangtze River"? With a series of questions, the reporter of "State-owned Assets Report" visited a number of subsidiaries of China Paper.
One
Strengthen the industrial chain
On a hill in Sitang Village, Taolinsi Town, Miluo City, which belongs to Yueyang City, on both sides of the muddy path after the rain, the torch pines that have become forests exude a refreshing fragrance. Qingming is approaching, and a forest farm manager of Maoyuan Forestry, a subsidiary of Yueyang Forest Paper, is remotely controlling a drone to conduct a safety inspection.
Yueyang Lin Paper Mill Area
The paper industry chain is roughly divided into three parts: upstream forestry, midstream pulp industry and downstream paper industry. According to the type of vegetation, the raw materials required for papermaking mainly come from two categories: coniferous forests and broad-leaved forests. Limited by the mainland's natural endowment and environmental protection policies, a large number of raw materials rely on foreign imports, among which softwood pulp is mainly imported from high-latitude countries such as Russia, and hardwood pulp is imported from low-latitude countries such as Brazil. Since the Russia-Ukraine conflict in 2022, affected by geopolitics, natural disasters and other factors, the supply of raw materials has been tight, prices have increased sharply, and the paper industry has come to winter. The control of the industrial chain is a matter of life and death, and the strategy of "integration of forest, pulp and paper" and the concept of "all costs are controllable" have been highly valued. "China's paper industry should increase the pulp and paper sector to extend the chain and supplement the chain, among which overseas Gabon companies should actively explore the supply of overseas pulp and paper raw material forests, and the domestic Maoyuan forestry should strive for 30% self-sufficiency in fiber raw materials in the whole system." Zhong Tianqi, Secretary of the Party Committee, Chairman and General Manager of China Paper, said. In response to the task indicators issued by the headquarters, Hu Huiqiu, deputy general manager of Maoyuan Forestry, said that the company currently has more than 1.8 million acres of forestry bases in Hunan, Hubei, Jiangxi and Guangxi provinces, and will expand to Guangdong, Hainan and other places in the future. While ensuring the supply of forest resources, it can also increase the income of carbon sinks. In the midstream pulping link, Yueyang Forest Paper has built a 400,000 tons/year pulping production line in Yueyang base. In this process, wood is physically or chemically made into pulp for different purposes, which is then dehydrated into solid pulp boards for papermaking. In addition to log pulp, Juntai Technology, a subsidiary of China Paper, has found another way to choose low-cost three leftovers. The three residues are the general term for felling residues, timber residues, and processing residues, and in layman's terms, they are leftovers for the manufacture of wooden furniture, branches, bark and other residues. "The three leftovers used to be available for free, but now even if the price increases, the cost is only about 60% of the logs." Chen Fu, deputy secretary of the Party Committee and secretary of the Commission for Discipline Inspection of Juntai Technology, introduced that the company has a 400,000 tons/year pulp and 300,000 tons/year dissolving pulp production line. Pulp can be used for papermaking, and dissolving pulp can be used for textiles, and the company adjusts the ratio of the two according to market conditions. In order to further reduce costs and increase efficiency, China Paper has increased its efforts to extend the chain of the logistics sector. The company's Tianyi Supply Chain has built a warehouse of nearly 30,000 square meters in Yueyang base. "In the past, we couldn't invoice or return the money without leaving the factory. Now we can let the products leave the factory and then ship them from the warehouse on demand, which can speed up capital turnover, reduce financial costs, and increase logistics revenue. Li Yong, general manager of Tianyi supply chain, said.
Guanhao high-tech base paper three-dimensional warehouse returned to the core papermaking link, China Paper updated equipment, expanded production capacity, while optimizing the allocation of resources throughout the group. In the Yueyang base, the construction of a 450,000-ton cultural paper project is in full swing, and the project is expected to be put into operation by the end of 2024. Ye Meng, Secretary of the Party Committee and Chairman of Yueyang Forest Paper, told the "State-owned Assets Report" reporter that the company plans to continue to expand production capacity on the basis of eliminating backward production capacity in the next 2-3 years, so as to form a scale effect. Looking at the entire Chinese paper industry, a 300,000-ton white cardboard machine from Ningxia is about to settle in Guangdong. Meiliyun, a subsidiary of China Paper, once built a factory in Ningxia, but Ningxia, which lacks water, few trees and has inconvenient transportation, is not suitable for the development of the paper industry. In order to optimize the allocation of resources, the headquarters transferred the equipment to Guanhao High-tech and relocated to its Zhanjiang base in the South China Sea. "Integration of forest, pulp and paper" and "all costs are controllable" have put on winter cotton clothes for China's paper industry, and deep-seated industrial transformation is accumulating strength to welcome spring.
Two
High-end green transformation
"Through collective discussions, China Paper has formed a new idea for the future development of integrity and innovation, that is, based on the high-end green pulp and paper industry of moderate and effective scale, aiming at the national development strategy, and cultivating and incubating relevant diversified strategic emerging industries." Zhong Tianqi said. In the traditional pulp and paper industry, high-end, intelligent and green transformation has become the general trend of developing new quality productivity. In terms of high-end, as the two main forces of China Paper, Yueyang Lin Paper is advancing bravely in the field of cultural paper, and Guanhao High-tech is deepening barriers in the field of special paper and white cardboard. Yueyang Forest Paper No. 8 machine is a representative of high-end products. Ye Meng introduced that since the start of the machine in 2003, from the 18th, 19th and 20th National Congress of the Communist Party of China, to the paper for key publications on the theme of the party and government, and then to the paper for magazines such as "Qiushi", this equipment provides high-end paper guarantee for the printing of party and government readings.
Yueyang Lin Paper No. 8 machine provides high-end paper guarantee for the printing of party and government reading materials, Xie Xianlong, secretary of the party committee and chairman of Guanhao High-tech, said that the company has been selected by the State Administration of Taxation and China Banknote Printing and Minting Corporation as the main supplier of carbonless copy paper for special VAT invoices since 1996. In the field of white cardboard, the company's high-end tobacco packaging paper and coated oil-proof white cardboard have maintained the first domestic market share for a long time. In terms of intelligence, China Paper continues to promote the intelligent transformation and digital upgrading of enterprises. In December 2023, the State-owned Assets Supervision and Administration Commission of the State Council and other five ministries and commissions jointly released the list, and Yueyang Forest Paper was selected as the unveiling unit of the 2023 Intelligent Manufacturing Demonstration Factory, and its work in intelligent online detection, accurate quality traceability, and lean production management was affirmed. Hongta Yanlord Intelligent Warehousing, a subsidiary of Guanhao High-tech, was selected as an excellent scenario for intelligent manufacturing in 2023. "At present, we have introduced AI in the field of safety production, and it has been initially applied in identifying helmet wearing, traffic violations, etc." Fan Shuangxi, deputy manager of the safety management department of Yueyang Forest Paper, said. In terms of greening, China Paper focuses on pulp and papermaking, and integrates energy saving, carbon reduction and pollution reduction into every process. "In 2023, the total annual carbon emissions of China's paper industry will decrease by 6.7% year-on-year, the carbon emissions per 10,000 yuan output value will decrease by 3.5% year-on-year, and the water consumption will decrease by 10.2% year-on-year." Zhong Tianqi said. Walking into the factory where Yueyang Lin Paper No. 8 machine is located, I saw that the dryer part of the equipment was wrapped by a huge air hood. Tian Tingyu, secretary of the Party branch and manager of the No. 8 machine of Yueyang Forest Paper Cultural Paper Division, introduced that the air hood is used for exhaust gas recovery to avoid direct air pollution. Machine 8 practices green and intelligent manufacturing, and the three paper grades it produces, including Tianyue color paper, have obtained carbon neutrality certification from the China Quality Certification Center in 2022. In addition to waste gas, wastewater and solid waste should also be properly disposed of in addition to the "three wastes" produced by pulp and paper manufacturing. Chengtong Tianyue, a subsidiary of China Paper, cooperated with Yueyang Forest Paper to deal with environmental protection matters. Under the leadership of Xu Hengsong, assistant manager of Chengtong Tianyue, the reporter visited the sewage treatment sector. In the aerobic aeration tank at the front, chocolate-colored wastewater swirls rapidly, and bubbles continue to gush out of the water surface. Along the sewage treatment line, 4 bottles of comparison water samples are placed at the end of the main outlet, of which the pulp wastewater is dark brown, the paper white water is light brown, and the water from the main outlet and the clean water cannot be distinguished by the naked eye. A stream of water diverts from the main outlet to build a pond, and three pots of water lilies have sprouted in the pond. "Hunan Province enforces strict wastewater discharge standards, and the COD (chemical oxygen demand) requirement is below 60 milligrams per liter, and we have now reduced it to less than 30 milligrams per liter." Xu Hengsong said. Li Yong opened the large screen of the smart center of Tianyi Supply Chain and called up the logistics information related to solid waste. According to the information, a truck carrying fly ash successfully arrived at a nearby cement factory, and the other party had signed for it. Li Yong revealed that hundreds of thousands of tons of solid waste at the Yueyang base can be used as raw materials for comprehensive utilization by downstream manufacturers every year.
Three
Nurturing emerging industries
While transforming and upgrading traditional industries, China Paper also pays attention to cultivating and expanding strategic emerging industries related to its main business. Shuangyang Hi-Tech, formerly a subsidiary of Yueyang Lin Paper, has just completed the upgrade management and has become a third-level company of central enterprises directly managed by China Paper. The company aims at electronic-grade high-purity hydrogen peroxide applied to the chip industry, in order to solve the country's long-standing "stuck neck" key technical problems. Shuangyang Hi-Tech is located in Huaihua City, Hunan Province, and was originally established to provide Juntai Technology with industrial-grade hydrogen peroxide for bleaching pulp nearby. Hydrogen peroxide can be divided into industrial grade, food grade, electronic grade and other categories according to its use, and can be divided into 5 grades from G1 to G5 according to its purity from low to high. Industrial-grade hydrogen peroxide is relatively low-end, and now it is a "red sea".
In 2019, Qin Jiamei, Secretary of the General Party Branch and General Manager of Shuangyang Hi-Tech Plant, made a strategic decision to enter the electronic grade hydrogen peroxide and introduced a technical backbone with a background in a multinational company. He told the "State-owned Assets Report" reporter that at present, there are only two domestic enterprises that can produce G5 grade electronic grade hydrogen peroxide, that is, an international giant that has set up a factory in China and its joint venture company, and pure domestic enterprises have not yet made a breakthrough. "Shuangyang Hi-Tech's factory in Huaihua has been able to produce G3 grade electronic grade hydrogen peroxide, and photovoltaic leader LONGi and panel leader BOE are our customers." Qin Jiamei introduced that the company is currently building a new 300,000 tons/year electronic-grade hydrogen peroxide project in Yueyang, which adopts the world's most advanced fluidized bed technology, and the product quality can reach the G5 grade electronic-grade hydrogen peroxide standard, and related products will be supplied to domestic head chip companies. Shuangyang Hi-Tech was selected by the Ministry of Industry and Information Technology as a national specialized and new "little giant" enterprise. With Shuangyang Hi-Tech as the pioneer, China Paper's various sectors have accelerated the incubation of emerging industries. "Eat the pulp residue and squeeze it clean." Chen Jinxin, Secretary of the Party Committee and General Manager of Juntai Technology, said. On the company's campus, a cooling tower for biomass power generation stands majestically. Using this new energy source, the company can generate up to 600 million kWh of electricity per year. Chen Jinxin introduced that starting from the main business, Juntai Technology is planning to build a new material base for bio-based special fibers, and strive to make breakthroughs in the fields of special anti-counterfeiting fibers, high-end filter fibers, and special insulating bamboo pulp. Another subsidiary, Chengtong Carbon Sink, is responsible for the development and trading of carbon sinks. "Carbon neutrality" requires reducing carbon emissions while increasing the capacity of forests and other countries to absorb and store carbon dioxide. As the first state-owned enterprise in Hunan Province to enter the carbon trading market, Chengtong Carbon Sink can provide integrated solutions for carbon sink development, carbon sink trading, carbon finance and derivatives. Guanhao High-tech Research has established three strategic emerging industry cultivation and incubation tracks of "special fiber materials, precision coating materials, and special chemical materials". At present, the company's digital printing film, medical film coating and other products have been put on the market. After Meiliyun handed over the 300,000-ton white cardboard machine to Guanhao High-tech, it developed new quality productivity according to local conditions, made use of Ningxia's low-cost power resources and abundant solar energy resources, and made efforts to "calculate in the east and calculate in the west" and photovoltaic track. Cultivating emerging industries plays a strong role in promoting market value management. Chen Can, manager of the strategic securities department of Yueyang Forest Paper, said that the price-earnings ratio of the pulp and paper sector is about 8-10 times, and the carbon sink sector is about 15-25 times. The reporter consulted the data and found that according to the closing price on March 29, Yueyang Forest Paper (600963. SH) has a price-to-earnings ratio of 33.79 times, much higher than the general level of the industry of about 15 times, and the data reflects the market's positive expectations for the development prospects of its emerging industries.
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