The worst moment in the paper industry has been optimistic about the paper industry

Although the recent paper stocks have risen to a certain extent as we expected, at the current time, we still believe that the paper industry is still a better choice.

First, from the perspective of big logic, we believe that 2012 will be the starting point for the medium and long-term improvement of the paper industry. The logic lies in: 1. The steady growth of demand: China's paper industry is a market where consumption and production are domestic and raw materials are in foreign countries. The consumption of paper industry mainly depends on domestic, the impact of foreign changes on paper consumption is relatively weak; 2. The slowdown in supply growth: domestic paper consumption is relatively stable, and supply improvement will be the big logic of industry opportunities, and it is expected Supply will be significantly improved in 2013; 3. The profitability of the industry will become larger: in the past few years, the profit on the paper chain has remained more in the pulping process, reflecting the different supply and demand relationships in the pulping and papermaking sectors. With the advent of the peak of overseas pulp production capacity, we judge that the profit in the future industrial chain may shift to the papermaking process, which will bring greater performance flexibility to paper companies. For specific analysis, please see the report "The fundamentals of the paper industry is gradually improving."

Second, from a short-term perspective, both paper prices and corporate sales are now at the bottom. With the arrival of the seasonal peak season in the second quarter, downstream distributors and printers will face replenishment demand, and corporate sales will improve. The price will also enter a seasonal rebound period, and the fundamentals of the industry will improve quarter by quarter.

Third, the current paper stock PB is at the bottom of history and has reflected enough pessimistic expectations. And we believe that the paper industry's competition situation will undergo a qualitative change in the next 1-2, paper stocks are expected to usher in a golden period of double valuation and profit, 2012 will be the starting point of this long cycle, we recommend investors Increase the proportion of paper stocks.

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