Paper stocks are still waiting to rise

In fact, in Vietnam, paper is an essential product and the paper industry plays a key role, making a significant contribution to economic development. In recent years, the paper industry has an average development rate of about 10-12% per year.

In the market, there is currently one state-owned enterprise, Vietnam Paper Corporation, 300 joint stock companies (JSCs), private enterprises and FDI enterprises. Most of them are small-scale enterprises with a production scale of less than 100,000 tons/year, there are less than 20 enterprises with a production scale of over 100,000 tons/year.

Less sinking 

For many years, the stocks of enterprises in the paper and pulp industry have mostly not received the attention of investors. The liquidity of this group of stocks is quite weak with each session trading only a few thousand units.

However, since the beginning of 2019, the strong breakthrough of the stock market in general has caused many stocks to benefit, including paper stocks.

For more than two months, HHP shares of Hoang Ha Hai Phong Paper Joint Stock Company have had quite positive developments when increasing sharply from the price of 15,100 VND/share at the beginning of the year to 17,500 VND/share (session 13/3), equivalent to an increase of nearly 16%.

Currently, HHP shares have had an adjustment to the price of 15,800 VND/share, but compared to the beginning of the year, it still recorded an increase of 4.6% and this adjustment is said to be inevitable after the previous period of increase.

The average matching volume in the last 10 sessions reached more than 301,000 units/session, compared to the general level of stable liquidity.

Similarly, another paper industry stock, DHC stock of Dong Hai Ben Tre Joint Stock Company, also recorded an impressive increase from 30,000 VND/share (session 2/1) to 36,050 VND/share (session 21/3), equivalent to more than 20%.

Previously, DHC stock was considered the leading factor of the paper industry stock group in 2018 thanks to its growth potential as well as existing factors.

After a long time of almost no trading, GVT shares of Viet Tri Paper Joint Stock Company have "returned" from the end of February 2019 with a session of ceiling increase from 11,000 VND to 12,700 VND/share (session 26/2).

Currently, GVT shares are trading at the price of 39,700 VND/share, recording an increase of 261% in just 18 trading sessions. In particular, out of a total of 18 trading sessions, GVT had 10 sessions of increase with 6 sessions of ceiling increase, only 1 session of floor decrease, the rest were price-standing.

At the end of 2018, Vietnam Paper Corporation registered to sell more than 2.13 million shares of Viet Tri Paper, equivalent to 29% of capital, with a starting price of 27,100 VND/share, 17,000 VND higher than the market price. However, GVT still proved its attractiveness when the number of orders reached 6.39 million shares, 3 times the number of shares offered.

Recording many changes in stock prices as well as market liquidity, enterprises have also had quite good business results in the past year, but according to many investors, paper enterprises often have low after-tax profit margins (about 10-11% on average), so it has not really attracted large cash flows.

On the other hand, for many years, the competitiveness of the domestic paper industry has been quite weak, and writing paper does not have much room for development.

Many paper stocks have had positive changes

Improving competitiveness

According to statistics of the Vietnam Paper and Pulp Association (VPPA), in the past year, the total consumption of paper of all kinds was temporarily calculated at 4,946 million tons, an increase of 16%; the total production of paper of all kinds reached 3,674 million tons, an increase of 31.2%; export volume of paper reached 809,250 tons, up 63%; the total export turnover of paper and finished paper products reached about 1,088 billion USD, up 50%...

However, according to Mr. Hoang Trung Son, Vice Chairman of VPPA, the paper industry is facing many challenges, such as domestic management policies still have many points that do not encourage the development of the industry. fierce competition in the domestic and export markets, high prices of input materials...

In addition, Vietnam's paper market still has many gaps, especially in the segment of high-end packaging paper products; Due to its small scale, outdated technological equipment leads to poor competitiveness.

In particular, the paper industry is not protected because most import taxes on paper are 0%, while China currently maintains an import tax rate of 7% for most types of paper. The market for recycled paper materials (scrap) is highly dependent on China's situation and policies.

At the recent Forum "Investment orientation for sustainable development of Vietnam's paper industry", experts also commented that the paper industry has many opportunities and development prospects. expanding the market from trade agreements such as EVFTA, CPTPP, etc.

Therefore, to support enterprises in the paper industry to develop, VPPA recommends and focuses on building a Strategy for the development of Vietnam's paper industry in the period of 2020-2025, with a vision to 2045 as a basis and orientation for investment, production and business of the paper industry when the Planning Law takes effect on January 1, 2019 helps the paper industry develop in a balanced, right direction and sustainable.

At the same time, attracting foreign investment projects to produce paper using high technology, especially for investment projects in paper products that cannot be produced domestically.

Linh Dan/ Business Times