德意志银行-xx行业研究-trip takeaways：a bubble is brewing but it may not burst yet-20170712-deutschebank.pdfVIP

Deutsche Bank Markets Research Asia Industry Date China China 12 July 2017 Resources Containerboard Industry Update Johnson Wan Trip takeaways: A bubble is brewing Research Analyst (+852 ) 2203 6163 but it may not burst yet johnson.wan@ Takeaways from Dongguan and Shenzhen paper trip on 5-6 July Companies Featured We met with the environmental bureau and paper mill and boxboard/box Lee Man Paper (2314.HK),HKD7.49 Hold makers. We believe the recent paper price hikes have been mostly speculative Nine Dragons Paper (2689.HK),HKD10.50 Sell in nature, starting with 1) a reduced supply due to production halts by leading Source: Deutsche Bank paper mills, 2) abnormal restocking by downstream users anticipating a peak 4Q, and 3) higher OCC pricing due to reduced import quotas and aggressive Related recent research Date Chinese bidding. Across the vertical chain, paper inventories are high at 4 1H preview: A strong beat at 11 Jul 2017 months (normally 1-1.5 months) with most box makers over-stocked. Due to peak cycle margins weak demand, small mills have begun cutting prices by RMB200-300/t while Johnson Wan large m