Event:
According to statistics released by PPPC, in February 2009, days of global product pump inventory dropped by 3 days than that of January 2009 to 47 days, and global product pump shipping volume totaled 3.037mn ton (+3.8% mom or -10.4% yoy).
Our Analysis and Estimation:
1. High inventory shows hardships in “de-inventory” of international pump industry;
2. Declined February inventory is benefited from purchase of China’s paper plants;
3. International pump price has touched the bottom, which will promote the establishment of new price interval in domestic paper industry chains;
Investment Suggestion:
After the violent price fluctuation during “de-inventory” of industrial chains, pump price rallies after touching the bottom, which will help restructure the price system of domestic paper-making industrial chains and finish constantly weak pattern of domestic pump price; however, rebound of pump price also depends on the rally of terminal demand. Based on current information we have known, demand recovery may not beyond expectation, thus we maintain “Cautious” rating for the industry.
We maintain “Cautious” rating for Shandong Chenming Paper Holdings (000488), Shan Dong Sun Paper Idty Jt Stk (002078), Shandong Bohui Paper Industry (600966) and Shandong Huatai Paper Company (600308).