There is only one listed company in Bursa will be benefit from cheap OCC price, it's MUDA PAPER. They turn OCC into kraft paper roll. (And turn kraft paper roll into corrugated box too).
Another three which named ORNA, MASTER and PPHB buying kraft paper roll and turn it into corrugated box. Their raw material is paper roll, NOT old corrugated container (OCC).
Anyway, cheap raw material (OCC) will benefit all these four companies. BUT MUDA will be benefited the most.
Let's see what MUDA management said in their previous quarter's prospect.
. Commentary on Prospects
Against the backdrop of higher sales volume, higher selling price and lower raw material cost, profitability of the Group in the next quarter is expected to be better. The Board is confident that the Group will deliver better profit in 2017.
No. No. No. You misunderstood me. I mean MUDA's management said 4th quarter result will be better than previous. Please read their prospects in page 15.
. Commentary on Prospects
Against the backdrop of higher sales volume, higher selling price and lower raw material cost, profitability of the Group in the next quarter is expected to be better. The Board is confident that the Group will deliver better profit in 2017.
Just like upstream player in steel industry, ANNJOO, MASTEEL and SSTEEL. When upstream player in good performance, downstream player like AYS, LEONFB and CHOOBEE all will be very good too.
I think we should stick to its raw material, Old Corrugated Containers (OCC) prices. If it goes down, it's very good for MUDA. If it goes up, nevermind. They can adjust selling prices and pass it to customers because high demand there.
I read their statement, looks like they adjust selling prices of corrugated box upwards again.
MUDA has benefited the most from lower OCC prices. Actually I'm not sure yet for downstream players. If one of them is doing good, I think others will follow.
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BearBear1980
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Posted by BearBear1980 > 2018-01-04 11:17 | Report Abuse
Paper price increase is double-edge sword, depend if company able to pass the increased cost to customer or not.