According to national customs data, the average price of imported pulp in the first half of 2024 was US$637/ton. It was still higher than the average price in the second half of 2023. This means that the overall industry will gradually enter the high-cost era in 2024. Under this trend, Hengda New Materials, the leader in the field of primary packaging paper for medical and food in China, achieved double-digit growth in operating income in the first half of the year by relying on its comprehensive competitive advantages.

The company's main products cover four major areas: medical packaging paper, food packaging paper, industrial specialty paper paper, and cigarette supporting paper. In recent years, in line with the development trend of "replacing plastic with paper", it has continuously optimized its product structure and continuously shifted its production capacity to the medical and food fields. In the first half of the year, it achieved a total operating income of 508 million CNY, a year-on-year increase of 32.06%, and a net profit attributable to the parent of 39.21 million CNY, corresponding to a net cash flow of 156 million CNY from operating activities, a year-on-year increase of 185.58%.

With the implementation of the plastic restriction order, the final sterilization mode of the medical device industry has been continuously promoted, and replacing plastic with paper has become a major development trend in the domestic medical and food primary packaging industry. Paper packaging is in line with the current environmentally friendly development trend of replacing plastic with paper in the medical and food primary packaging industry at home and abroad. It is the future development direction and has a large market growth space.

As a national high-tech enterprise, Hengda New Materials has continuously strengthened the research, forming its own core technology system, and better meeting the relevant requirements of air permeability, antibacterial properties, waterproof and oil-proof properties, and biocompatibility in the downstream packaging field, as well as the development trend of environmental protection and health. As of the end of June 2024, the company has 42 patents, including 37 invention patents.

Relying on its own more than 20 years of production process experience, the company can meet the development and production needs of various products. At present, the company has established a mature system for product formulation and process flow control of primary packaging paper such as medical and food, and has the ability to develop and manufacture multiple products at the same time, and its core competitiveness in the industry is becoming stronger.

At present, Hengda New Materials has achieved a leading position in the field of mid-to-high-end medical and food primary packaging base paper, and its market share in the field of medical and food packaging base paper ranks among the top in the industry. It has cooperated with major customers for more than 5 years, has established a long-term and stable cooperative relationship, and has entered the supply chain system of large fast food chains such as KFC, Starbucks, and Dicos. It has a wide reputation and a good brand image in the field of medical and food primary packaging base paper in China. In the future, with the deep cooperative relationship in the early stage, the supply share is expected to continue to expand.

Hengda New Materials has put into production a total of 7 production lines with a total capacity of about 100,000 tons, and a 50,000-ton new packaging paper production line and a 10,000-ton deep processing project have been started. After all are completed and put into production, the total capacity will be about 150,000 to 160,000 tons. Meanwhile, the company will continue to focus on the field of medical and food packaging paper. With the launch of production lines and the vigorous development of new products, there is still hope for an increase in production capacity.

Source: Securities Market Weekly