CHINA PAPER LEADERS · NO.04
Why Is Shanying International Strong?
What It Really Operates Is a Circular Network
Looking Beyond the Losses to See How Recovered Fiber, Seven Major Production Bases, 2 Billion Square Meters of Packaging, and End Customers Are Connected—and Why Profits Are Under Pressure, What Adjustments Have Already Occurred, and What Still Needs to Be Verified in the Recovery
A truly valuable circular network is not created by simply placing “recycling, papermaking, and packaging” side by side in an organizational structure. It is created by channeling recovered fiber generated by end customers back into the base-paper system, enabling base-paper mills and packaging plants to share order, pricing, quality, and inventory data, and jointly optimizing logistics, energy, and working-capital turnover.
Scale is the most visible aspect of Shanying International. According to the company’s 2025 annual report, its seven domestic papermaking bases have installed capacity totaling 10 million metric tons, while its packaging segment produces more than 2 billion square meters annually; base-paper sales volume reached 7.4860 million metric tons and packaging sales volume reached 2.097 billion square meters. This scale is certainly important, but explaining Shanying only through capacity and sales would miss the part that is harder to replicate: it simultaneously occupies four nodes—recovered-paper sourcing, base-paper supply, corrugated board and box manufacturing, and major end customers.
More worthy of industry attention is that these nodes do not form a one-way chain. Packaging plants serve customers in consumer electronics, home appliances, food, chemicals, light industry, and e-commerce and express delivery; recyclable paper generated by end customers can flow back into recovered-fiber procurement; the seven base-paper production bases are respectively located near consumption, manufacturing, and recovered-paper generation regions; and digital systems further connect procurement, quality inspection, production scheduling, warehousing, and gross-profit calculations. What Shanying is truly attempting to operate is a closed loop of “recycling–papermaking–packaging–recycling.”
But network scale has not automatically translated into strong profits. In 2025, the company recorded a loss of RMB 1.136 billion in net profit attributable to shareholders of the parent, while the papermaking business had a gross margin of only 3.22%; in the first quarter of 2026, net profit attributable to shareholders of the parent was a loss of RMB 497 million, and the overall gross margin calculated from the financial statements was approximately 2.46%. Looking only at the profit result can make the issue appear to be “scale failure”; considering sales volume, the spread per metric ton of paper, supplier payment terms, depreciation on new capacity, and convertible-bond redemption together leads to a more accurate conclusion: the core business remains operational, while pressure is concentrated in gross profit generated per unit of product and funding costs.
This distinction matters. Base-paper sales volume still increased 2.25% in 2025, while the sales-to-output ratios for base paper and packaging reached 99.21% and 99.96%, respectively; the preliminary 2026 interim earnings forecast also stated that base-paper production and sales volumes increased year over year. Meanwhile, the net loss attributable to shareholders of the parent for the second quarter of 2026 is estimated to have narrowed by 63.18% from the first quarter, and the company achieved a monthly profit in June. This indicates that the losses were not caused solely by a slowdown in the sales network and that recovery variables can already be identified; however, the interim earnings forecast remains an unaudited preliminary estimate and cannot yet support a declaration of a full turnaround.
Therefore, this article is not a “company scale overview,” nor does it portray network advantages as certain profitability. The questions worth answering are: Which industrial variables does Shanying’s circular network actually control? Why has this network temporarily failed to generate returns commensurate with its scale? And which indicators must validate the strategic transformation that began in 2026?
FOUR NUMBERS · Four Key Figures
7.4860 Million Metric Tons 2025 Base-Paper Sales Volume | 2.097 Billion Square Meters 2025 Packaging Sales Volume |
RMB 3.381 Billion 2025 Net Cash Flow from Operating Activities | –RMB 1.136 Billion 2025 Net Profit Attributable to Shareholders of the Parent |
Scope note: All figures above are from the 2025 annual report. The company’s references to “10 million metric tons of installed capacity” and its industry ranking are based on company disclosures; designed or installed capacity does not equal actual output, effective capacity, or profitable capacity.
EVIDENCE LEVEL · First Distinguish Three Types of Evidence
Realized results:2025 operating, financial, production and sales volume, and segment gross-margin data are from the audited annual report.
Preliminary operating signals:The first-quarter 2026 report is unaudited; the interim earnings forecast is a preliminary estimate by the finance department, and the formal interim report has not yet been disclosed.
Strategic and project signals:“7030,” the chemical pulp project, and cooperation with JD Industrials all require validation through construction, operations, and financial results and are not counted as realized earnings.
LOSS BRIDGE · First Understand the Losses
The Essence of the Losses: It Is Not That Products Cannot Be Sold,
but That Contribution per Metric Ton Is Insufficient
First, rule out a common misreading: base-paper sales volume and the sales-to-output ratio did not break down in 2025. What actually hit the income statement was the spread per metric ton of paper. In its response to the regulatory inquiry, the company disclosed that the nationwide average purchase price of recovered paper rose 9.28% year over year, while the company’s average base-paper selling price declined 1.63%, pushing the papermaking business gross margin further down to 3.22%; according to the impact calculation in the company’s response, changes in gross profit from principal products explained 56.98% of the change in net profit for the period. This is therefore closer to a “gross-margin problem” than a “sales-volume problem.”
This also included an operating adjustment made for a clearly stated purpose. To address redemption of the “Shanying 19 Convertible Bonds” and concentrated capital expenditures, the company stated that it offered purchase-price concessions to certain upstream suppliers in exchange for extended payment terms; normal monthly settlement terms of 30 to 90 days could mainly be extended to 6 to 12 months through supply-chain financing. The procurement side therefore gave up part of its gross margin; according to the supplementary information to the cash flow statement, increases in operating payables provided a positive RMB 2.207 billion adjustment to 2025 operating cash flow, helping the company generate RMB 3.381 billion in net cash flow from operating activities. It should be emphasized that the RMB 2.207 billion is the adjustment from all operating payables and cannot be attributed entirely to supply-chain financing. This was a choice to “prioritize liquidity protection while sacrificing gross margin temporarily”; it should not be embellished as profit, nor misread as a failure of sales capability.
From operating pressure to financial results, the evidence chain can be fully closed:
External spread:Higher domestic recovered paper purchase prices and lower base-paper selling prices directly compressed gross profit per metric ton of paper.
Active adjustment:Purchase-price concessions were exchanged for longer payment terms, converting part of the profit margin into a liquidity buffer.
Capacity cycle:New capacity in Jilin, Suzhou, Anhui, and other locations came onstream, increasing sales volume while initially absorbing depreciation, ramp-up costs, and unit fixed costs.
Profit result:The base-paper business gross margin fell to 3.22%; combined with lower investment income and higher asset and credit impairment losses, this ultimately resulted in an annual loss.
MARGINAL REPAIR · Marginal Changes Already Visible
First Quarter 2026 –RMB 497 Million | Second Quarter 2026 Approximately –RMB 183 Million | June 2026 Monthly Profit |
Note: Second-quarter data are derived from the interim earnings forecast and first-quarter report; June profitability also comes from the earnings forecast. All remain subject to verification in the formal interim report.
A rigorous yet constructive conclusion is not “the company has already turned around,” but rather: the sources of the losses can be decomposed, the largest single concentrated redemption event has been resolved, and quarterly losses are narrowing; if supply-chain credit discounts decline, utilization efficiency of new capacity improves, and gross profit per metric ton of paper recovers, the income statement has substantial operating leverage. However, this pathway must still be demonstrated jointly by formal gross-margin data, short-term debt coverage, and free cash flow.
ONE SENTENCE · Shanying in One Sentence
Shanying’s real strength is not any single paper machine, but its simultaneous control of fiber entry points, regional capacity, packaging customer touchpoints, end-market recycling entry points, and industrial data; what it must now prove is whether this network can evolve from “supporting scale and liquidity” into “consistently generating profits and free cash flow.”
CORE JUDGMENT
Bottom Line First: Shanying Is Strong in “Circular-Network Control”
This network can be broken down into six interlocking control surfaces:
Fiber entry: domestic collection channels, overseas recovered-paper trading, and recycled pulp jointly form the raw-material interface
Production-base network: seven papermaking bases are located near manufacturing, consumption, recovered-paper generation areas, and core markets
Packaging touchpoints: corrugated board and box plants extend base-paper sales into end-customer service and demand sensing
Closed-loop recovery: packaging customers can in turn connect to high-quality recovered fiber, reducing supply uncertainty
Digital scheduling: quality, price, orders, capacity, inventory, and gross profit are integrated into the same data system
Capital and credit: payment terms, supply-chain financing, and cash flow serve as hidden infrastructure for network operations
01 · FIBER ENTRY
Layer One: Recovered Paper Is Not a Single Raw Material, but a Procurement and Quality Network
The cost starting point for recycled packaging paper is not the quoted price of recovered paper, but the “delivered-to-machine cost of qualified fiber.” For the same metric ton of recovered paper, differences in moisture content, contamination rate, fiber strength, sorting purity, transportation distance, and settlement terms can produce completely different costs for usable fiber. What a large enterprise truly needs to manage are four variables: stable volume, qualified quality, delivery cadence, and capital tied up.
Shanying’s annual report discloses that approximately 97% of the raw materials used by its major papermaking subsidiaries come from recovered fiber; the company has established procurement networks domestically and overseas and supplements its raw-material pathways through recovered-fiber trading in the United States, the United Kingdom, the Netherlands, and other locations, as well as recycled-pulp bases in Southeast Asia. The value of overseas trading cannot simply be understood as “shipping overseas recovered paper directly into China”—following changes in solid-waste import policies, trading, overseas material use, recycled-pulp processing, and domestic raw materials are distinct compliance pathways and must be accounted for separately.
Of the RMB 1.816 billion in principal-business revenue from recovered fiber in 2025, the company explained in its response to the annual-report inquiry that 93.44% came from WPT, headquartered in the Netherlands, and that this portion did not involve domestic supply-chain financing. U.S.-based Cycle Link primarily serves Asian customers, with group-affiliated customers accounting for more than 90%, making it closer to a group raw-material channel. In other words, Shanying’s overseas recovery system includes both external trading and internal supply, and the strategic value and profit reporting of the two are not the same.
Professional Assessment
The moat of a recovery network is not “the more procurement points, the better,” but simultaneous improvement in the unit cost of qualified fiber, direct-procurement ratio, loose recovered-paper collection capability, quality traceability, and delivery stability. Shanying’s 2026 plan to reduce transfer-trading business and increase the share of loose-material procurement at sorting centers indicates that the network is shifting from scale coverage toward procurement efficiency.
02 · NETWORK GEOMETRY
Layer Two: The Essence of Seven Production Bases Is to Reshape Supply-and-Demand Radius
Packaging base paper has relatively limited unit value and high transportation volume, making it highly sensitive to logistics radius. Locating bases closer to recovered-paper generation areas can reduce raw-material collection and transportation costs; locating them closer to corrugated board and box plants and end-market manufacturing can shorten finished-product transportation and delivery cycles. Shanying has established seven papermaking bases in Ma’anshan, Jiaxing, Zhangzhou, Jingzhou, Zhaoqing, Songyuan, and Suzhou, Anhui, covering East China, South China, Central China, and Northeast China.
According to the company’s annual report, its capacity serves 19 provinces and 1 municipality, covering regions that account for approximately 78% of the domestic market. This percentage is based on company disclosure, but the layout logic is clear: the Yangtze River Delta combines packaging demand and recovered-paper supply, Fujian and Guangdong connect to export-oriented manufacturing, Central China serves as a regional hub, and the Northeast base fills distant-market coverage. Phase I of the Suzhou, Anhui, base, with 900,000 metric tons of packaging-paper capacity, commenced production in 2025, largely completing the domestic footprint. The next stage has already shifted from “whether a base exists” to “whether each base can operate at high load and low cost.”
The production-base network also includes energy and environmental infrastructure. Except for the Guangdong base, which relies on centralized power supply from the industrial park, the company discloses that all other domestic papermaking bases have captive power plants; industrial combustible-solid-waste power-generation projects in Ma’anshan, Haiyan, and Jingzhou have commenced operation. Coordinating heat, electricity, water, sludge, and solid-waste treatment at the base level can reduce infrastructure costs otherwise borne independently by individual paper machines.
The more production bases there are, the greater the potential for synergy—and the greater the scheduling complexity. A truly effective network must continuously reduce “kilometers from recovered paper to mill, kilometers from base paper to packaging plant, order lead time, and idle-capacity cost,” rather than merely adding capacity points on a map.
03 · CUSTOMER LOOP
Layer Three: 2 Billion Square Meters of Packaging Turns the Per-Ton Paper Business into a Customer Interface
Base-paper producers generally know market prices, but may not directly know why brand customers change box designs, reduce basis weight, change printing, or adjust delivery batches. Packaging plants are closer to applications and can detect earlier the order structures, quality complaints, promotion cycles, and overseas-expansion needs of customers in consumer electronics, home appliances, food, e-commerce, and industrial products.
Shanying’s packaging segment covers Jiangsu, Zhejiang, Anhui, Fujian, Guangdong, Hubei, Shandong, Sichuan, Tianjin, Guizhou, and other regions, with secondary plants in Vietnam and Thailand; products include flexographically printed, preprinted, offset-printed, and digitally printed corrugated boxes, as well as industrial molded-fiber packaging and food molded-fiber packaging. Five independent R&D and testing centers in Qingdao, Suzhou, Jiangsu, Jiaxing, Zhuhai, and Taipei focus on design for 3C packaging and innovative logistics packaging.
More important is the reverse closed loop. The company discloses that downstream customers of the packaging segment can be connected with recovered-fiber procurement, enabling access to more consistent-quality recovered fiber through end-customer cooperation. Thus, a corrugated box does not leave the system after delivery: customer orders create packaging demand, and used paper packaging can become upstream raw material again, meaning base paper, corrugated boxes, and recycling are no longer three isolated transactions.
Why Does the Packaging Segment Matter?
In 2025, the papermaking business had a gross margin of 3.22%, while paper products had a gross margin of 12.20%. The two differ in products, capital intensity, and accounting structure and therefore cannot be compared simplistically as better or worse; however, the data at least indicate that value density is generally higher closer to customers and solutions. In 2026, Shanying is no longer making rapid packaging-revenue expansion its primary objective and is instead shifting toward high-return orders and high-value-added customers, precisely to repair this part of the value chain.
04 · DIGITAL CONTROL
Layer Four: A Network Can Become Efficient Only When It Is Scheduled by Data
Multiple production bases, paper grades, and packaging plants do not inherently create synergy. Without unified data, the network can instead generate duplicate inventory, inefficient transfers, order mismatches, and pricing distortions. The value of Shanying’s digitalization lies precisely in turning a complex network into something that can be scheduled.
According to the annual report, the company uses an advanced planning and scheduling system connected with ERP and MES to enable multi-plant, multi-product, multi-constraint scheduling; a unified intelligent warehousing platform works with autonomous forklifts; AI vision and intelligent whole-vehicle moisture detection are used for recovered-fiber quality inspection; and a business-intelligence platform integrates procurement, production, customer, and financial data while establishing real-time calculation and forecasting mechanisms for papermaking gross profit. Ma’anshan Xiangheng’s intelligent scheduling and production-planning system was selected as a 2025 digital transformation exemplary case by the Ministry of Industry and Information Technology.
The most industrially meaningful point here is not that “AI is being used,” but whether data actually change decisions: can the moisture content of a batch of recovered paper affect procurement settlement; can an order be assigned to the production base with the lowest total cost; can changes in base-paper prices be transmitted in real time into corrugated-box quotations; and can inventory and transportation operate for network-wide optimization rather than single-mill optimization.
Digitalization is not an independent moat. Only when it continuously reduces procurement deviations, scheduling losses, inventory days, quality claims, and unit logistics costs does it move from “system go-live” to “profit go-live.”
05 · NETWORK ECONOMICS
Layer Five: Network Value Must Ultimately Be Reflected in an Economic Account
A circular network is easy to justify narratively but difficult to validate financially. Connecting more collection points, paper machines, packaging plants, and end customers only means that a company has more nodes; whether those nodes create value depends on whether procurement, manufacturing, logistics, products, and capital all improve simultaneously.
Circular-Network Value Formula
Network Value = Qualified-Fiber Procurement Advantage + Transportation-Radius Savings + Capacity-Utilization Benefit + Packaging Value Added + Working-Capital Efficiency – Cross-Regional Coordination Costs – Credit Costs – Depreciation and Capital Tied Up.
In 2025, the company generated RMB 3.381 billion in net cash flow from operating activities, significantly better than the RMB 1.136 billion loss in net profit attributable to shareholders of the parent. However, supplementary information to the cash flow statement shows that increases in operating payables contributed a positive RMB 2.207 billion, while increases in inventories and operating receivables tied up RMB 461 million and RMB 164 million, respectively. This means cash-flow resilience genuinely exists, while also relying materially on supplier payment terms and operating liabilities.
The annual-report inquiry response further opens up the credit layer: most suppliers normally have monthly settlement terms of 30 to 90 days, while supply-chain financing can mainly extend the company’s payment terms to 6 to 12 months. The company disclosed that supplier-financing interest borne by it in 2025 was RMB 16.2750 million, accounting for 1.79% of finance expenses; the current ratio was 0.43 and 0.45 excluding supply-chain financing. Based on its review, the annual auditor concluded that the relevant transactions had commercial substance and that the accounting treatment complied with applicable standards. This should be understood as the company’s response and the auditor’s review conclusion, not as a reason to disregard liquidity constraints.
As of the end of March 2026, the company had RMB 12.160 billion in current assets and RMB 28.999 billion in current liabilities, for a current ratio of approximately 0.42; the debt-to-asset ratio was approximately 70.92%. The RMB 4.793 billion in cash and cash equivalents on the balance sheet also cannot all be interpreted as freely available cash, because the main reason for the increase in monetary funds at year-end 2025 was an increase in deposits pledged as guarantees.
The most professional assessment of Shanying is not a binary choice between “strong cash flow” and “high debt,” but rather: this network has strong cash-organization capabilities, while free cash flow, short-term debt coverage, supplier payment terms, and returns on capital still need to improve together.
06 · PROFIT CONVERSION
Layer Six: The Losses Reflect a “Profit Mismatch,”
and the Conditions for Recovery Are Taking Shape
The first mismatch is the combination of higher raw-material costs and lower finished-product prices. In its inquiry response, the company disclosed that the average purchase price of domestic recovered paper in 2025 was RMB 1,733.08/metric ton, up 9.28% year over year, while the average base-paper selling price was RMB 2,926.88/metric ton, down 1.63% year over year. Industry supply and demand depressing finished-product prices was an external pressure; offering purchase-price concessions to certain suppliers in exchange for extended payment terms to secure convertible-bond redemption and cash reserves was an active choice. The two forces acted simultaneously on procurement and sales, causing gross profit per metric ton of paper to come under pressure before sales volume did.
The second mismatch is the timing difference between new output and the absorption of fixed costs. Projects in Jilin and Suzhou, Anhui, gradually commenced production in 2024–2025, increasing production and sales of corrugating medium, but new capacity must pass through equipment run-in, product qualification, order ramp-up, and efficiency improvement. Supplementary information to the 2025 cash flow statement lists RMB 1.769 billion in depreciation of fixed assets and related items. Scale reduces unit costs only when high utilization, stable yield, and reasonable selling prices are achieved simultaneously; during early ramp-up, depreciation and operating and maintenance expenses often enter the income statement first.
Third, the network’s high-value segments are still not large enough. In 2025, principal-business revenue from papermaking was RMB 19.566 billion with a gross margin of 3.22%, while principal-business revenue from paper products was RMB 6.729 billion with a gross margin of 12.20%. Packaging is closer to customers and has a higher gross margin, but its revenue scale is far smaller than base paper. Shanying must continuously increase the share of high-return orders, design services, lightweighting, and functional packaging to change the overall profit structure.
Fourth, overseas assets remain a drag. In 2025, overseas principal-business revenue was RMB 3.428 billion, with an overall gross margin of –0.33%; gross margins for recovered fiber and paper products were 8.41% and 15.16%, respectively, while the main drag was Phoenix Paper, with a gross margin of –14.91%. According to the company’s response, Phoenix Paper was affected by lower selling prices, capacity not yet fully released, equipment recovery, and market rebuilding. This shows that not every node within the “global network” makes a positive contribution.
These four types of pressure are not the same in nature. Industry spreads and credit discounts are cyclical and temporary, leaving room for recovery after the debt peak passes; fixed costs from new capacity can be diluted through higher utilization and yield; increasing the share of packaging is a slower structural project; and Phoenix Paper requires separate improvements in products, markets, and asset efficiency. It would be inaccurate to classify all of them as “a weak industry,” and equally unscientific to classify all of them as “permanent losses.”
The Real Dividing Line Is the Sequence of Recovery
First resolve concentrated redemption pressure, then reduce the credit discounts paid in exchange for longer payment terms; next, restore gross profit per metric ton of paper through capacity utilization and product mix; and ultimately convert net cash flow from operating activities into free cash flow. Only if this sequence is completed can Shanying’s large network evolve from “cash-organization capability” into “stable-return capability.”
REPAIR EVIDENCE · Recovery Evidence Chain
Five Quantifiable Positive Signals,
and the Verification Boundary for Each
01 | The Core Operating Network Has Not Lost Momentum
In 2025, base-paper sales volume increased 2.25% and the sales-to-output ratio was 99.21%; the packaging sales-to-output ratio was 99.96%. This indicates that channels, customers, and delivery systems remain resilient. Boundary: a high sales-to-output ratio proves only that products can be absorbed by the market; it does not mean that selling prices and unit profits have recovered.
02 | The Largest Concentrated Redemption Event Has Been Passed
During 2025, approximately RMB 1.828 billion of the “Shanying 19 Convertible Bonds” was converted into shares, while the remaining approximately RMB 16 million in principal was redeemed and the bonds were delisted; non-current liabilities due within one year declined from RMB 5.766 billion to RMB 2.133 billion, a decrease of approximately 63%. This creates conditions for reducing the practice of “trading gross margin for payment terms,” but short-term borrowings and the current ratio still need further improvement.
03 | Capital Use Is Shifting from Expansion Toward Discipline
Finance expenses declined to RMB 911 million in 2025, down 12.70% year over year; in the first quarter of 2026, cash paid to acquire and construct fixed assets, intangible assets, and other long-term assets was RMB 134 million, significantly lower than RMB 799 million in the same period a year earlier. This is consistent with the company’s direction of “strictly controlling capital and expense expenditures,” but quarterly capital expenditure can be affected by project-payment timing, so long-term intensity cannot be judged from a single quarter alone.
04 | Existing Capacity Is Beginning to Shift Toward Efficiency-Oriented Operations
In Q&A at its May 2026 earnings briefing, the company stated that its current capacity utilization rate was 90% to 95% and that it planned to optimize, upgrade, or dispose of inefficient fixed assets. This point-in-time operating metric indicates that core capacity still has a strong operating foundation; however, it is not an audited full-year average utilization rate, and the ultimate assessment must still consider unit costs, maintenance losses, and profitability by production base.
05 | The Profit Side Has Shown Consecutive Signs of Convergence
The interim earnings forecast indicates that the second-quarter net loss attributable to shareholders of the parent was approximately RMB 183 million, about RMB 314 million lower than in the first quarter, narrowing by 63.18%, while June was profitable on a monthly basis. This is currently the most direct evidence of marginal recovery; however, monthly profitability may be affected by paper prices, costs, maintenance, and non-recurring factors, and the formal interim report is still needed to provide a bridge between gross margin and cash flow.
Therefore, there is sufficient basis for a positive assessment, but it must be stated accurately as “the conditions for recovery are taking shape and early signals have emerged.” The three hard indicators for verifying a genuine turnaround remain: sustained recovery in the papermaking gross margin, net cash flow from operating activities no longer relying primarily on increases in payables, and positive free cash flow after capital expenditures.
2026 CHANGE SIGNALS
Six Latest Signals Are Rewriting This Network
April 2026 | “7030” Shifts the Operating Objective from Scale to Returns
The company’s new five-year strategy proposes moving the papermaking business’s gross-margin level into the industry’s 70th percentile, increasing high-return packaging orders by 30% annually, and incorporating free cash flow as a core metric in operating assessment and decision-making. These are targets and a management framework, not profit commitments, but the direction has shifted from asset expansion toward liquidity, profit, and returns on assets.
First Quarter 2026 | Collections and Investment Discipline Improve First; Gross Margin Remains to Be Verified
First-quarter revenue was RMB 6.215 billion, down 8.15% year over year; net profit attributable to shareholders of the parent was a loss of RMB 497 million; net cash flow from operating activities was RMB 452 million, up 69.54% year over year; and cash received from sales of goods and rendering of services increased approximately 7.68% year over year. During the same period, cash paid to acquire and construct long-term assets declined from RMB 799 million to RMB 134 million. Collections and investment discipline have improved, but the overall gross margin calculated from the financial statements remained only approximately 2.46%, meaning the recovery has not yet fully transmitted to the profit side.
May 2026 | Central China 706,000-Metric-Ton Chemical Pulp Project Enters Environmental Impact Assessment Public-Notice Stage
The publicly available environmental impact assessment summary indicates that the project proposes two phases comprising bleached kraft chemical pulp production lines of 400,000 and 306,000 metric tons, with more than 95% imported wood chips, and that the products are planned to be sold externally in pulp-sheet form. The company’s annual-report strategy, meanwhile, emphasizes building wood-pulp lines at Central China and other bases and improving pulp-paper integration for high-end packaging paper. The emphasis of these two public disclosures is not entirely the same; internal synergies, capital expenditure, and construction timing should be subject to formal approvals, project implementation, and subsequent announcements.
June 2026 | Connecting Recycling, Logistics, and Packaging-Material Demand with JD Industrials
On June 5, the two parties signed a strategic cooperation agreement. Public information points to recovered-paper recycling systems, two-way logistics, AI production management, low-carbon initiatives, and packaging R&D, and states that Shanying became JD Industrials’ first designated partner factory in the packaging-material category. This cooperation is highly aligned with Shanying’s circular network, but at this stage it remains a cooperation framework and cannot be used to project procurement volumes, orders, or profit contributions in advance.
July 2026 | Regulatory Inquiry Makes the Network’s Credit Layer More Transparent
The company disclosed in detail seven categories of supply-chain financing products, underlying procurement documents, goods and fund flows, payment terms, and financial impacts. The annual auditor stated that, based on its review, the relevant transactions had commercial substance and the accounting treatment complied with applicable standards. For industrial analysis, the significance of this response is that supply-chain finance is not a peripheral tool, but part of how the recovered-fiber network stabilizes small and medium-sized suppliers, extends payment periods, and safeguards liquidity.
July 2026 | Second-Quarter Loss Narrows, but the Inflection Point Still Awaits Verification in Formal Financial Statements
The interim earnings forecast estimates a loss of RMB 680 million in net profit attributable to shareholders of the parent and a loss of RMB 730 million in net profit attributable to shareholders of the parent excluding non-recurring gains and losses; the second-quarter net loss attributable to shareholders of the parent was approximately RMB 183 million, about RMB 314 million lower than in the first quarter, narrowing by 63.18%, and June was profitable on a monthly basis. The trend has shifted from “widening losses” to “narrowing losses,” but before the formal interim report is disclosed, the complete bridge among selling prices, gross profit per metric ton of paper, working capital, and free cash flow remains unavailable.
CONCLUSION
The Network Is the Capability,
Returns Are the Proof
Shanying International’s true strength lies in progressively organizing within a single network several critical nodes that papermaking companies typically leave outside their boundaries—recovered fiber, regional paper machines, packaging converting, end customers, recycling entry points, logistics data, and supply-chain credit.
This network gives the company broader procurement coverage, shorter supply radii, more direct customer insight, and stronger cash-organization capabilities; but it also brings capital intensity, cross-regional coordination, overseas operations, supplier payment terms, and credit costs. The 2025 loss is not a simple negation of the network’s value, but a clear stress test: when industry spreads narrowed while concentrated redemption obligations and new-capacity ramp-up occurred simultaneously, the network first preserved production and sales and cash organization, while profits absorbed the adjustment costs.
The positive side is that this stress test has exposed a specific sequence for improvement rather than leaving a vague problem. The peak in convertible-bond redemption has passed, capital expenditures and finance expenses have begun to converge, and the second-quarter loss is estimated to have narrowed significantly; if supply-chain credit discounts decline as liquidity improves, new-capacity efficiency continues to rise, and high-return packaging orders gradually expand, Shanying’s profit elasticity may be released faster than its revenue elasticity.
Going forward, six verifiable indicators should be monitored to determine whether Shanying has truly completed its transformation:
Can the papermaking gross margin recover sustainably from the low level of 3.22% and approach the “industry’s 70th percentile”?
Can high-return packaging orders grow 30% annually and translate into improved segment profits and customer mix?
Can direct procurement of domestic recovered paper, loose-material procurement, and quality data genuinely reduce the delivered-to-machine cost of qualified fiber?
Can new production bases complete capacity ramp-up so that sales-volume growth outpaces growth in depreciation and unit fixed costs?
Can net cash flow from operating activities reduce its reliance on growth in payables and extended payment terms and convert into free cash flow?
Can Phoenix Paper and other overseas nodes move from strategic coverage to stable positive gross margins and returns on capital?
Shanying has connected the industrial chain; its most important task in the next stage is to turn every connection into lower unit costs, higher order value, and more reliable free cash flow.
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BIOTEN Packaging · Industry Insights · Research Notes
Shanying International “2025 Annual Report”: Mirror of Original Announcement
Shanying International “First Quarter 2026 Report”: Mirror of Original Announcement
Shanying International “2026 Interim Earnings Forecast”: Original Disclosure on the Shanghai Stock Exchange
Shanying International’s Response to the Regulatory Inquiry on Its 2025 Annual Report: Original Disclosure on the Shanghai Stock Exchange
Summary of Q&A from Shanying International’s 2025 Annual and First Quarter 2026 Earnings Briefing: Public Information from China Paper Network
Environmental Impact Assessment Information for Shanying’s Central China 706,000-Metric-Ton Chemical Pulp Project: Public Environmental Impact Assessment Summary
Strategic Cooperation Between Shanying International and JD Industrials: Information from China Paper Magazine
This article is provided for industry research and general informational purposes only and does not constitute investment, business, or legal advice. The analysis of corporate strategy, competitiveness, and industry opportunities contains professional judgments based on publicly available information, does not represent official statements by the company, and does not imply any cooperation or product-adoption relationship. 2025 data are from the audited annual report; the first-quarter 2026 report is unaudited; the 2026 interim earnings forecast is a preliminary estimate and cannot substitute for the formal interim report. The 90% to 95% capacity utilization rate stated at the company’s earnings briefing is a point-in-time operating metric and does not equal an audited full-year average utilization rate. Designed capacity, company rankings, strategic targets, cooperation agreements, filings, and environmental assessments do not equal actual output, authoritative industry rankings, secured orders, completed commissioning, or commercial returns. Facts and compliance conclusions related to supply-chain financing follow the company’s inquiry response and the annual auditor’s review. Companies should conduct further verification based on formal exchange announcements, project approvals, actual operations, and specific application requirements. Information verified through August 9, 2026.
