New Orientation behind Sun Paper's Recent Strategic Maneuvers
On April 20, Sun Paper Holding released several announcements. Aside from the company’s 2019 annual report, the updates on the company’s two projects in the U.S. and China had attracted market attention. Sun Paper decided to officially deregister Sun Biomaterial Company (U.S.), which was its sorely owned subsidiary in the U.S., and the company’s biorefinery project in Arkansas was officially terminated. In the meantime, Sun Paper had officially released the construction plan of its 3,500kt/a integrated timber-pulp-paper project in Beihai of Guangxi autonomous region.
In order to prepare for the 700kt/a biological refining project in the United States, Sun Paper formed Sun Biomaterial Company in the U.S. in 2017. However, due to the Sino-U.S. trade dispute, the environment had changed profoundly, and the project was not started. Early this year, Sun Paper had decided to terminate its project in the U.S., but the company had not officially announced this decision in China until recently.
At the same time, Sun Paper officially released the construction plan of its 3,500kt/a integrated timber-pulp-paper project in Beihai of Guangxi autonomous region (hereinafter referred to as the Beihai Project). The announcement started that Guangxi Sun Paper, a Sun Paper subsidiary established in July 2019, would be responsible for the construction of the two phases of the Beihai Project. Therein, the phase I project includes a 550kt/a cultural paper mill, a 150kt/a tissue paper mill and the ancillary 800kt/a chemical pulp mill and 600kt/a CMP mill.
Currently, Sun Paper has completed the required procedures. On July 26, 2019, the Beihai Project acquired the investment project filing certificate from Guangxi Autonomous Region (Certification No.: 2019-450512-22-03-024589). On January 2, 2020, the Beihai Project received an authentication from the Department of Ecology and Environment of Guangxi regarding its previously submitted environmental impact statement (GHS [2020] No. 1).
According to Sun Paper’s 2019 annual report, the company’s overall profit margin has improved significantly in Q4 to 26.19%, up 2.35% from Q3 and 8.86% Y-O-Y. The Beihai Project in combination with the company’s production bases in Shandong and Laos will complete the company’s strategic layout. Sun Paper will be able to cover both the coastal and inland regions of China as well as countries and regions covered by the ‘Belt and Road’ initiation.
After the construction of the Sun Paper’s Beihai Project started, in addition to the previously released APP Jingui integrated project in Qinzhou (phase I project investment: 8.1 billion RMB) and the integrated project invested by Stora Enso in Beihai, Guangxi has become one of the major pulp and paper bases in China. Currently, the top three pulp and paper bases include Shandong, Jiangsu and Zhejiang in the East coast, but pulp and paper industry have begun to thrive in Guangxi due to its unique geographic location and climate. In the future, Guangxi may surpass Shandong and Zhejiang to become one of the top three.
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