华泰集团强在哪里？从新闻纸到浆纸化工，如何重构增长结构

KEY FINDING · CORE ASSESSMENT

Huatai's strength has expanded from a single product—newsprint—into an integrated combination of paper machines, wood pulp, chemicals, multiple production bases and a digital platform.

In 2025, gross margins improved in packaging paper and industrial paper, pulp-product revenue rose significantly, and overseas sales grew. The next indicators to watch are inventory turnover, profitability by production base and operating cash flow.

RESEARCH QUESTION

Can the equipment, technology, talent and customer systems inherited from the newsprint era support a more resilient pulp, paper and chemicals portfolio at Huatai?

Scope of analysis:The 3.1027 million-tonne figure is the group-level basis used in the paper and paperboard output ranking. Financial and project data primarily refer to the consolidated accounts of Shandong Huatai Paper Industry Shareholding Co., Ltd. The two reporting scopes are kept separate. The 2026 interim figures remain an earnings forecast.

01 · NEWSPRINT LEGACY

How Can Existing Capabilities Continue to Create Value as Newsprint Demand Declines?

In 2025, China's paper and paperboard output reached 141.35 million tonnes, up 3.74% year on year. Over the same period, industry-wide revenue from pulp, paper and paper products fell 2.59%, while total profit declined 13.55%. The industry is still increasing output, but value growth is proving harder to achieve than volume growth.

The shift is even more pronounced in newsprint. National newsprint output fell 7.14% to 650,000 tonnes in 2025, while consumption dropped 12.73% to 960,000 tonnes. From 2016 to 2025, output and consumption declined at average annual rates of 14.28% and 10.67%, respectively.

Demand contraction has not erased the capabilities accumulated on the production side. Huatai Paper's annual report states that the company has long served national newspapers, Party newspapers and printing-materials customers, and has participated in the development and revision of standards for newsprint and supercalendered paper. Continuous operation of high-speed paper machines, basis-weight stability, printability and quality control remain valuable in machine conversions and the development of new paper grades.

Since the start of the 14th Five-Year Plan, Huatai has upgraded newsprint machines at its Dongying, Hebei and Guangdong bases, completed the relocation and conversion of its Rizhao pulp and paper operations, and expanded into high-grade printing and writing paper, environmentally oriented communication paper, corrugating medium and food packaging paper.

Newsprint generated RMB 1.092 billion in revenue in 2025, accounting for approximately 8.8% of Huatai Paper's total revenue and 14.1% of its paper-products revenue. Newsprint still retains technical and customer value, but it is no longer the principal growth engine.

02 · PULP & CHEMICALS

What Problems Do the 700,000-Tonne Wood-Pulp Project and the Chemicals Business Solve?

In 2025, Huatai Paper completed and commissioned a chemical wood-pulp project with annual capacity of 700,000 tonnes, together with supporting cogeneration facilities. The construction-in-progress schedule in the annual report shows that RMB 2.196 billion was transferred to fixed assets during the year. In the same year, the company produced 679,970 tonnes of pulp products, sold 176,740 tonnes, and held 11,820 tonnes in closing inventory.

These figures cannot be used to calculate the utilisation rate of the 700,000-tonne project. Huatai already had other pulping capacity, and the annual report does not separately disclose the project's output, internal consumption, pulp grades or unit costs.

Nevertheless, pulp-product output was substantially higher than external sales and closing inventory remained low. Combined with the stated project objective of securing pulp supply and reducing raw-material costs, this indicates that internal supply is one of the project's principal uses. The specific volume consumed internally and the self-sufficiency ratio have not been disclosed.

Whether this wood-pulp capacity becomes a competitive advantage will ultimately depend on substitution of purchased pulp, cost per tonne of paper, fibre quality, paper-machine efficiency and cash recovery.

The chemicals business forms a second operating line. Huatai Paper's annual report states that some caustic soda and hydrogen peroxide are used internally in papermaking, while most chemical products are sold externally. The portfolio includes caustic soda, liquid chlorine, hydrogen peroxide, chloromethanes, propylene oxide, chloroacetic acid and aniline.

In 2025, Dongying Huatai Chemical Group Co., Ltd. reported revenue of RMB 3.933 billion and net profit of RMB 158 million. In Huatai Paper's consolidated accounts, the chemicals segment reported revenue of RMB 3.560 billion and a gross margin of 7.62%, up 1.96 percentage points from the previous year. The former figures are reported at subsidiary level; the latter refer to the consolidated product segment.

Chemicals and papermaking share feedstock synergies, but the chemicals business must also compete in its own markets. Higher liquid-chlorine disposal costs in 2025 show that the co-product balance between caustic soda and chlorine products still requires careful management. Plant utilisation, internal consumption, external sales and downstream offtake must be assessed together.

Paper machines, wood pulp and chemicals now sit on the same operating scorecard. The next question is whether they can jointly lower costs, stabilise quality and generate cash returns.

03 · OPERATING RESULTS

Which Changes Are Already Visible in the Financial Data?

Reporting note:Overseas sales include multiple products and remain modest in scale; the figures should not be extrapolated to a single paper grade or to the entire export business. What they do show is that overseas revenue and gross margin improved in 2025 under this reporting scope.

Profitable examples have emerged among the production bases. In 2025, Rizhao Huatai Paper recorded net profit of approximately RMB 185 million, while Dongying Huatai Chemical Group recorded approximately RMB 158 million. Other papermaking bases remain in the improvement phase. The company has proposed independent operation and accounting, with each subsidiary responsible for its own profit and loss, alongside lower inventory and stronger collection of receivables.

In the first quarter of 2026, revenue was RMB 3.124 billion, up 1.25% year on year, and net profit attributable to shareholders reached RMB 22.8765 million, returning the company to quarterly profitability. The interim earnings forecast projects first-half attributable net profit of RMB 14 million to RMB 21 million, down 68.95% to 79.30% year on year, and net profit excluding non-recurring items ranging from a loss of RMB 10 million to a profit of RMB 5 million.

The company attributed the volatility mainly to declines in selling prices for printing and writing paper and coated paper that exceeded the reductions in the costs of wood pulp and coating chemicals. Proposed measures include accelerating the ramp-up of the pulp line, increasing substitution with captive pulp, reducing low-margin paper products, expanding higher-value products and overseas sales, and improving the efficiency of chemical plants.

Status note:These measures remain operating plans. Their effectiveness must be confirmed by the formal interim report and subsequent operating data.

04 · PROJECTS & PEOPLE

What Capabilities Is Huatai Still Building Through Its Rizhao Projects and Digital Platform?

Huatai Paper's 2025 R&D disclosure reported investment of RMB 416 million, equivalent to 3.34% of revenue, and 646 R&D employees. The company said it developed more than 30 new products and technologies during the year, including food-grade wood pulp. Its high-permeability, high-strength extensible sack paper designed to replace plastic was selected for the 'Shandong Manufacturing · Lu Chain Premium Products' programme.

According to the company's announcement dated 2 June, the project with annual capacity of 150,000 tonnes of high-yield unbleached wood fibre and 45,000 tonnes of lignin involved total investment of approximately RMB 450 million. Trial production succeeded on 28 May 2026 and the project entered commissioning. The supporting 150,000-tonne high-permeability extensible paper project successfully began material feeding in September 2025; the company states that it is now operating normally and has received a positive market response.

The wood-fibre and lignin project remains in commissioning. The announcement also does not disclose customers, sales volume, gross margin or repeat orders for the high-permeability extensible paper. At this stage, project progress can be confirmed, but commercial performance cannot.

Huatai Paper's annual report also states that the company is building a 'paper-industry brain' spanning production, supply chain, marketing, logistics and capital flows. Shunjie Digital Technology (Shandong) Co., Ltd., a Huatai Paper subsidiary, was selected for the National Data Administration's 2025 Trusted Data Space Innovation and Development Pilot Programme. Selection does not in itself generate financial returns, but it provides publicly verifiable evidence of progress in connecting data across production bases.

05 · INDUSTRY COOPERATION

How Will Huatai's Restructuring Change Collaboration Across the Value Chain?

Huatai's expansion of captive pulp, paper-machine conversions, development of specialty papers and growth in overseas sales will change how suppliers and downstream customers work with the company. The impact will extend beyond procurement volumes to quality, process control, delivery and inventory management.

For suppliers of wood chips, pulp and chemicals,the focus of collaboration will shift from purchase price alone to fibre quality, pulp yield, specific chemical consumption, supply reliability and total cost per tonne of paper. The 700,000-tonne chemical wood-pulp project strengthens Huatai's internal pulp supply and requires external suppliers to articulate clearer differentiated value.

For equipment, automation and digital-service providers,opportunities will centre on stable operation after paper-machine conversions. Machine speed, web-break frequency, grade-change losses, first-pass yield, energy consumption and maintenance intervals are more meaningful than simply stating that an upgrade has been completed.

For functional-material and packaging-converting companies,new paper grades still require validation under actual converting conditions. Extensible sack paper, food packaging paper and other functional papers must continue to be tested for printing, bag making, coating, heat sealing, filling and transport performance. Food-contact, recyclability and biodegradability claims must also correspond to the specific finished-product structure.

For brand owners and distributors,product value must be assessed through supply reliability, volume orders, return rates, commercial terms and repeat purchases. Overseas-sales data improved in 2025, but the ability to secure sustained, higher-value orders requires validation in subsequent years.

For value-chain partners, captive-pulp utilisation, paper-machine performance, repeat orders for new products, inventory by production base and consolidated cash flow are key indicators of Huatai's progress. These data will emerge through periodic reports, project announcements and actual cooperation; they need not be forced into a single fixed checklist.

CONCLUSION

Huatai's Transformation Must Ultimately Deliver Gross Margin, Turnover and Cash Flow

Huatai has completed a substantial part of its structural transition: newsprint is no longer the revenue centre; its paper machines cover a broader range of grades; the 700,000-tonne chemical wood-pulp project strengthens upstream integration; the chemicals business both supports papermaking and operates independently; and the Rizhao projects and digital platform continue to expand the company's capabilities.

In 2025, packaging paper, industrial paper, pulp products and overseas sales all showed improvement. At the same time, the listed company still needs to restore overall profitability, reduce inventory and strengthen cash flow. Both sets of facts must be considered together.

Huatai's next operating priorities are clear: improve the utilisation of captive pulp, reduce exposure to low-margin products, expand higher-value orders, improve turnover across production bases, and ensure that synergies between chemicals and papermaking are reflected in consolidated cash flow.

For a capital-intensive company, a successful transition rarely has a single defining moment. The new growth structure will be secure only when paper machines run steadily, customers place repeat orders, inventory declines and cash returns.

NEXT COMPANY · NO. 08

Next｜China Paper Investment Co., Ltd.

Its paper and paperboard output reached 3.0979 million tonnes in 2025, ranking eighth and increasing 19.15% year on year.

The next article will first separate group, listed-company and multi-base reporting scopes before examining specialised integration, product portfolio and quality of growth. This note confirms only the sequence in the series and does not prejudge any business conclusion.