COMPANY SNAPSHOT

2025 Output of key enterprises 2.2034 million tonnes No. 15 · Association survey basis

H1 2026 Operating revenue RMB 4.895 billion YoY +18.76%

H1 2026 Net profit attributable to shareholders RMB 230 million YoY +88.95%

Sources: China Paper Association; Wuzhou Special Paper’s 2026 interim report

CORE ASSESSMENT

Wuzhou Special Paper’s advantage is evolving from “selling a large volume of one paper grade” to “reliably delivering multiple grades across different applications.” Food packaging paper provides the company’s specialist foundation; glassine, tracing, transfer, and industrial-support papers broaden the product spectrum; industrial packaging paper absorbs new scale; and chemi-mechanical pulp, river-linked production bases, and logistics projects connect raw materials with delivery. The simultaneous improvement in profit, production and sales, and operating cash flow in H1 2026 provides positive early validation of this chain. However, a higher share of value-added products, returns on capital expenditure, and pulp-and-paper integration will take longer to materialize.

Scale enables Wuzhou Special Paper to move faster; product mix and cash flow determine how steadily it can advance.

SCOPE OF ANALYSIS

This analysis covers Wuzhou Special Paper Group Co., Ltd. (stock code: 605007), using primarily the company’s consolidated figures. “Output of key enterprises” follows the China Paper Association survey basis, while “designed capacity” follows the basis disclosed in the company’s periodic reports; the two are not used interchangeably. Annual and interim reports are formal corporate disclosures, while standards-platform materials are used to confirm the status of standards and participating drafters. The analysis in this article is not an independent audit opinion.

The “platform” described in this article is an analytical summary of products, production bases, raw materials, and customer interfaces, not a legal or industrial registration category. Production-line commissioning, ramp-up to designed output, project construction, standards drafting, and customer cooperation represent different stages; none directly proves that every product already earns a high margin, that every SKU holds the same certification, or that projects under construction have begun generating revenue.

01 SCALE BENCHMARK

No. 15 Establishes the Scale Benchmark; the Next Question Is Value per Tonne

In 2025, Wuzhou Special Paper ranked No. 15 among the China Paper Association’s top 30 key paper enterprises by output. Production reached 2.2034 million tonnes, up 46.99% from 1.4990 million tonnes in 2024. These figures establish the company’s position on the industry’s supply side and show that new production lines at the Hubei base are changing the group’s production and sales scale.

Output rankings answer only “how much was produced,” not “how much value was retained per tonne.” In 2025, the company reported operating revenue of RMB 8.884 billion, up 16.05% year on year; net profit attributable to shareholders of the listed company was RMB 245 million, down 32.36%; gross margin for the principal business was 7.86%, down 1.90 percentage points; and net operating cash flow was negative RMB 57 million. The divergence between expanding revenue and output, on the one hand, and profit and cash flow, on the other, indicates that the commissioning of new bases, period expenses, and product-price competition were still being absorbed.

Scale expansion is not an answer in itself. Once the number of paper machines and total tonnage are established, management must determine whether product mix, capacity utilization, gross profit per tonne, inventory, and cash collection improve together. Wuzhou Special Paper’s H1 2026 results provide the next window for assessment.

Sources: China Paper Association’s output ranking for key enterprises; Wuzhou Special Paper’s 2025 annual report

02 PRODUCT PLATFORM

The Product Matrix Determines Resilience Across the Cycle

In its interim report, Wuzhou Special Paper divides its machine-made paper business into five series—food packaging, daily consumer, publishing and printing, industrial-support, and industrial packaging papers—supported by chemi-mechanical pulp. Food packaging papers include base paper for paper cups, noodle bowls, food containers, and other vessels. Glassine, silicone-coated release paper, greaseproof paper, digital transfer paper, and tracing paper serve labeling, food service and baking, printing, and consumer applications. Industrial-support papers serve functional applications such as stainless-steel interleaving paper, CTP plate interleaving paper, electronic-glass separator paper, and electrolytic-capacitor paper. Industrial packaging papers include kraft linerboard, corrugating medium, and paper core board.

A broad product range does not automatically create an advantage. The advantage arises because demand, raw materials, and cycles do not move in perfect synchronization across paper grades. Food packaging paper is the company’s specialist foundation; industrial packaging paper absorbs the Hubei base’s incremental scale; and daily consumer and industrial-support papers provide more specialized customer interfaces. The more complete the product spectrum, the greater the opportunity to reuse capabilities internally across production scheduling, R&D trials, and customer collaboration.

As of the disclosure date of the 2026 interim report, the company listed designed capacity in operation of 780,000 tonnes for food packaging materials, 652,000 tonnes for daily consumer materials, 350,000 tonnes for publishing and printing materials, 51,000 tonnes for industrial-support materials, 1.05 million tonnes for industrial packaging materials, and 300,000 tonnes for chemi-mechanical pulp, for total designed capacity of 2.883 million tonnes. Designed capacity is an equipment-and-project measure; it is not the same as current-period output and does not mean that every unit of capacity operates at the same level of profitability.

In H1 2026, sales by series were 231,200 tonnes of food packaging paper, 233,000 tonnes of daily consumer paper, 125,400 tonnes of publishing and printing paper, 9,800 tonnes of industrial-support paper, and 616,100 tonnes of industrial packaging paper. Industrial packaging has become a major destination for incremental volume, while food packaging paper remains the company’s long-established specialist interface. The next step is to convert R&D and customer orders for value-added food paper, release paper, and industrial-support paper into more stable unit value.

Sources: Wuzhou Special Paper’s 2026 interim report; Wuzhou Special Paper Product Center

03 MANUFACTURING PLATFORM

Three River-Linked Bases Connect Paper Machines, Energy, and Delivery into One Manufacturing Platform

Wuzhou Special Paper’s three principal bases are located in Quzhou, Zhejiang; Hukou, Jiangxi; and Hanchuan, Hubei. The interim report summarizes their roles as follows: the Zhejiang base benefits from the local specialty-paper cluster, while the Jiangxi and Hubei bases are positioned along the main Yangtze River corridor, facilitating waterborne transport of raw materials and finished goods and complementing energy infrastructure and regional customer coverage. For a capital-intensive paper producer, the value of this layout is not simply “more factories on the map,” but the integration of raw-material procurement, pulp and paper production, energy consumption, and delivery radius into a single cost model.

In H1 2026, the company reported 21 completed paper production lines with total designed capacity of 2.883 million tonnes; all five lines at the Hubei base had reached designed output. During the reporting period, machine-made paper output was 1.2042 million tonnes and sales were 1.2155 million tonnes, increasing 17.63% and 23.13% year on year, respectively. This indicates that released capacity has translated into sales, although peak-season utilization, inventory turnover, and contribution per tonne still require continued monitoring.

The raw-material side is also being strengthened. The Jiangxi base already has 300,000 tonnes of chemi-mechanical pulp capacity, providing internal supply for food packaging and printing and writing papers. Civil construction and partial equipment installation for the 600,000-tonne-per-year chemical pulp project began in H1 2026, alongside construction of the Jiujiang logistics terminal. The company disclosed that PM19 printing and writing paper and PM25 industrial packaging paper had been commissioned, while PM22 industrial packaging paper, the 600,000-tonne chemical pulp project, and the logistics terminal are expected to be completed and commissioned in H1 2027. These projects are not yet fully operational; their value must be validated by actual data on raw-material self-sufficiency, transport efficiency, product cost, and cash returns.

Advancing from “paper-machine commissioning” to coordination across pulp and paper, energy, and logistics is central to Wuzhou Special Paper’s next stage of competitiveness. Paper machines provide output; pulp-and-paper integration provides cost flexibility; and river-linked logistics improve the delivery radius. The platform advantage reaches operating results only when all three are reflected in the same orders and cash flows.

Sources: Wuzhou Special Paper’s 2026 interim report

04 STANDARDS & INNOVATION

From Product Innovation to Industry Standards: Expertise Is Becoming a Shared Technical Language

Competition in food packaging paper cannot be assessed only by brightness, basis weight, or price. Delivery performance also includes water and grease resistance, heat sealability, printability, forming stability, and the interaction among base paper, coatings, inks, adhesives, and finished containers. Wuzhou Special Paper disclosed in its annual report that the national standard Coated Paper and Board for Food Packaging and the industry standard Food Packaging Paper, both of which it helped draft, were formally issued in 2025. The national standards platform also lists Wuzhou Special Paper Group Co., Ltd. as one of the drafting organizations for GB/T 36392—2025.

The value of participating in standards development is not an automatic “all products comply” label. It is the ability to place production metrics, testing practices, and application experience into a technical framework shared across the industry. GB/T 36392—2025 was issued on June 30, 2025 and took effect on January 1, 2026; QB/T 1014—2025 was issued on July 2, 2025 and took effect on February 1, 2026. The standards establish a common language for quality, but each product must still be assessed individually according to its intended use, structure, coating, and test results.

R&D investment is also expanding with the production footprint. In 2025, the company invested RMB 93.5326 million in R&D, equivalent to 1.05% of operating revenue, and increased its R&D workforce from 286 to 545 people. In H1 2026, R&D expenses reached RMB 89.0853 million, up 92.87% year on year. These figures indicate that the company is adding engineering resources for new production lines and paper grades. The next test is whether this investment translates into sales of value-added grades, repeat customer orders, and higher gross profit per tonne.

Sources: Wuzhou Special Paper’s 2025 annual report; National Public Service Platform for Standards Information, GB/T 36392—2025 and QB/T 1014—2025

05 OPERATING PERFORMANCE

In H1 2026, Volume, Price, Profit, and Cash Flow Began Moving in the Same Direction

The financial statements first reflected the costs of expansion in 2025. By H1 2026, operating signals had become more complete: operating revenue was RMB 4.895 billion, up 18.76% year on year; net profit attributable to shareholders of the listed company was RMB 230 million, up 88.95%; net profit excluding non-recurring gains and losses was RMB 226 million, up 96.87%; and net operating cash flow was RMB 106 million, compared with negative RMB 74 million in the prior-year period.

The company attributed the improvement to the full commissioning of industrial packaging paper lines at the Hubei base, year-on-year profitability gains across nearly all paper grades, and continued refinement of cost controls. Sales and revenue also moved in the same direction: machine-made paper output was 1.2042 million tonnes and sales were 1.2155 million tonnes. The simultaneous growth in revenue and sales provides evidence of a phased operating recovery.

Viewed by raw-material system, two distinct operating paths emerge. In H1 2026, revenue from wood-pulp-based products was RMB 3.266 billion, up 7.79% year on year, while revenue from recovered-paper-based products was RMB 1.613 billion, up 49.48%. The average selling price of wood-pulp-based products was RMB 5,449 per tonne, down 3.60%, whereas the average selling price of recovered-paper-based products was RMB 2,618 per tonne, up 9.46%. The company uses chemi-mechanical pulp and long-term procurement agreements to buffer wood-pulp volatility, while the release of industrial packaging paper capacity captures recovered-paper-based demand. Running both raw-material routes in parallel contributes to the platform’s operating flexibility.

These results are encouraging, but the time horizon must remain explicit: H1 is a phased observation window, not proof that the full year or the entire cycle has reversed. The next questions are whether peak-season orders in H2 hold, whether low-margin grades are reduced, whether value-added products gain share, and whether positive cash flow can be sustained.

Sources: Wuzhou Special Paper’s 2026 interim report

06 OPERATING BOUNDARIES

Capital, Capacity, and Customers Determine How Far the Platform Can Go

Capital efficiency must pass the first test. At the end of June 2026, the company had total assets of RMB 14.416 billion, an asset-liability ratio of 73.33%, and a current ratio of 0.54. Net cash flow from investing activities in H1 was negative RMB 1.359 billion, while construction in progress stood at RMB 2.547 billion. Capital-intensive expansion creates room for a stronger product mix and pulp-and-paper coordination, but it also places funding costs, project schedules, and cash recovery squarely before management.

Capacity absorption is equally important. The interim report notes that food packaging paper, glassine paper, and industrial packaging paper continue to face industry competition; if demand underperforms, incremental capacity may remain idle or intensify price competition. Total designed capacity of 2.883 million tonnes is a capability boundary, not realized sales or profit. Capacity utilization, inventory, gross profit per unit, and operating cash flow must be evaluated together.

Customer mix and product mix determine order quality. The company disclosed customers across food service, labeling, and industrial-support applications, including Master Kong, Uni-President, and Avery Dennison. A customer list demonstrates a basis for cooperation but does not, by itself, prove current order volumes or sustained repeat purchases across all SKUs. The indicators that require tracking are the share of long-term orders, customer repurchase, export mix, and the contribution of premium grades to revenue and profit.

Wuzhou Special Paper’s next stage of “strength” therefore is not about adding more paper machines. It is about proving that multi-base expansion has entered a phase of quality realization through higher-value paper grades, more stable customer orders, stronger cash collection, and lower unit costs.

Sources: Wuzhou Special Paper’s 2026 interim report

BIOTEN OBSERVER · PAPER TALK · THE NUMBERS REVEAL THE ESSENCE

Wuzhou Special Paper has built a three-layer capability structure. The first layer is a product platform that began with food packaging paper and has expanded into five paper-grade series. The second is a manufacturing platform comprising the Zhejiang, Jiangxi, and Hubei bases together with chemi-mechanical pulp, energy infrastructure, and river-linked logistics. The third is the phased operating validation reflected in the simultaneous improvement of production and sales, profit, and operating cash flow in H1 2026.

What is already materializing is the release of industrial packaging paper capacity in Hubei and the parallel operation of wood-pulp-based and recovered-paper-based product lines. What remains to be proven is the cost return after the 600,000-tonne chemical pulp project and logistics terminal enter operation, a higher share of value-added paper grades, and the platform’s ability to withstand the next round of price volatility.

For participants across China’s paper value chain, the lesson from Wuzhou Special Paper extends beyond a single company. Specialty-paper competition is moving from one paper grade, one paper machine, and one transaction toward application-specific products, pulp-and-paper coordination, shared standards language, and verifiable cash flow. Only when every technology, production line, and customer need is integrated into the same delivery chain can scale mature into sustainable industrial capability.

NEXT ISSUE

Next: Shandong Century Sunshine Paper Group Co., Ltd.

Ranked No. 16 among China’s top 20 paper companies. The next article will examine how the company converts a scale-based manufacturing platform into quality growth through a product mix spanning printing and writing paper and specialty paper, supported by pulp-and-paper integration.

Sources: China Paper Association, 2025 Annual Report on China’s Paper Industry