Excerpt from WeChat public account:“印刷企业家”(Original: 王三好)

Before the holiday, I talked about the annual reports of enterprises in the circle such as Zijiang Enterprise, Dongfeng Group, Zhongrong Shares, Hexing Packaging, Yutong Technology and Jinjia Shares.

Among them, the main one was about He Xingxing Packaging's "This billion-dollar printing and packaging giant releases its 2024 annual report: the lowest revenue in five years, net profit less than 100 million yuan, and the problem of low profit margin remains to be solved", which triggered the most sighs from the bosses.

In 2024, Hexing Packaging achieved a revenue of 11.47 billion yuan and a net profit attributable to shareholders of listed companies of 93.5551 million yuan, with a net profit margin of only 0.82%.

In the comment section, one boss said with a sigh: Companies are looking for profits after slim profits, and profits are pushed to the extreme.

 Some bosses are disdainful, saying that the three good students have not actually done printing and packaging, "this industry earns 40-60%".

Some bosses think 40-60% is too high: in the current market, a profit of 20-30% is already very good; another boss replied: are you crazy? The printers would have made a fortune with such a high profit! Net profit of 3%-5%.

The three good students always speak mainly and swear to the sky that they have never actually done printing and packaging.

 The question is: can a student who has never really done this job make 40-60%?

In terms of gross margin, there should be some companies that can achieve this level.

There are certainly such orders in terms of net profit margin, but there are very few companies that can achieve this level of overall profitability on an annual basis.

Bosses who have been on the front line, with rich practical experience and weathered storms, say yes, right?

Next, the three good students will take stock of the 19 most profitable companies in the A-share, Hong Kong and New Third Board markets over the past year.

In 2024, the net profit attributable to shareholders of the parent company (referred to as "net profit") of these 19 enterprises all exceeded 100 million yuan. Let's see how high the profit margin of these leading companies is.

Who are the 19 companies?

In November 2024, Sanhao Students published an article (13 printing and packaging enterprises that have made over 100 million yuan in net income in 9 months: Yutong, Aoruijin, Zijiang, Yongxin, Jinjia, Hexing, Zhongrong, who else?) All 13 companies are from A-shares. In theory, they have made a net profit of over 100 million yuan in the first nine months, and they should have made a net profit of over 100 million yuan for the whole year.

However, among these 13 companies, two had their full-year net profits lower than the level of the first nine months, falling out of the category of those with net profits exceeding 100 million yuan: one is Hexiong Packaging, which reported a net loss of 50.8673 million yuan in the fourth quarter, with its full-year net profit fixed at 93.5551 million yuan; the other is Jinjia Shares, which recorded a net loss of 165 million yuan in the fourth quarter, with its full-year net profit fixed at 71.9852 million yuan.

In 2024,15 of the 19 companies with net profits of over 100 million yuan will come from A-shares, two from Hong Kong stocks, one from the New Third Board, and one from COFCO Packaging, which has been acquired by Aorijin and delisted from Hong Kong stocks.

To make profits, we should first pay attention to the revenue. Because without enough volume, it is still difficult to earn 100 million yuan.

Among the 19 companies, there are four big bosses with revenues of over 10 billion yuan.

Among them, Yutong Technology achieved revenue of 17.157 billion yuan, up 12.71% year on year, ranking first.

Aurijin, the leading company of tinplate can making, achieved a revenue of 13.673 billion yuan, slightly down 1.23% year on year, ranking second; COFCO Packaging, which will be formally included in Aurijin's statement in 2025, achieved a revenue of 11.053 billion yuan, up 7.68% year on year, ranking third.

In 2024, Zijiang Enterprise broke the 10 billion yuan for the first time, with a revenue of 10.637 billion yuan, up 16.69% year on year, ranking fourth.

Revenue of 19 enterprises (unit: 100 million yuan)

In addition, three companies had revenues of more than 5 billion yuan.

Baosteel Packaging and Shengxing Shares, two steel can manufacturers, achieved revenue of 8.318 billion yuan and 7.130 billion yuan respectively, up 7.19% and 0.50% year on year; Jihong Shares, which is engaged in both packaging and cross-border e-commerce, achieved revenue of 5.529 billion yuan, down 17.41% year on year.

Six companies had revenues between 2 billion yuan and 5 billion yuan.

Meiyin Sen, which has both corrugated packaging and premium packaging, achieved a revenue of 4.07 billion yuan, up 14.07% year on year; Yongxin Shares, the leader in flexible packaging, achieved a revenue of 3.525 billion yuan, up 4.34% year on year.

Jiamai Packaging, a tinplate can manufacturer, achieved revenue of 3.20 billion yuan, up 1.52% year on year; Zhongrong Shares, a leader in folding color boxes, achieved revenue of 2.782 billion yuan, up 7.30% year on year.

Lions Mountain Group from Hong Kong achieved revenue of HK $2.669 billion, or about RMB 2.471 billion at the end of 2024 exchange rate, up 4.13% year on year.

To ensure that its revenue growth rate is consistent with the annual report, the lion Rock Group's 2023 revenue in the table is also converted into RMB at the end of 2024 exchange rate.

The subsequent revenue of Junsisi Group and the net profits of the two enterprises are converted into currency according to this principle.

Dasha, which mainly uses corrugated packaging and also includes wine bags, cigarette bags and pulp molding, achieved a revenue of 2.131 billion yuan, up 5.84% year on year

Four companies have revenues between 1 billion and 2 billion yuan.

Chuangyuan Shares, which mainly focuses on exports, achieved a revenue of 1.939 billion yuan, up 42.73% year on year; Xinjufeng, a sterile packaging enterprise that strongly acquired Fenmei Packaging, achieved a revenue of 1.706 billion yuan, down 1.79% year on year.

Donggang Shares, the leader in printing bills, achieved a revenue of 1.178 billion yuan, down 1.92% year on year; Junsisi Group, which mainly focuses on paper board games, achieved a revenue of 1.211 billion Hong Kong dollars, or about 1.121 billion yuan, up 16.53% year on year.

Two companies had revenues of less than 1 billion yuan.

Yongji, which is involved in the pipe pharmaceutical business, mainly involving industrial hemp, achieved a revenue of 905 million yuan, up 10.69 percent year on year.

Jiangtian Technology, a leading label printing company seeking to be listed on the Beijing Stock Exchange, achieved revenue of 538 million yuan, up 6.00% year on year.

How high is their net profit?

In 2024, the total revenue of 19 enterprises reached 99.03 billion yuan, with a year-on-year growth of 5.77%. Among them, 15 enterprises saw an upward year-on-year growth, and only 4 enterprises saw a decline, and 3 enterprises saw a year-on-year decline of less than 2%.

In other words, the 19 industry and different market segment leaders have performed well in terms of revenue over the past year.

A sufficient scale and basically stable revenue have laid the foundation for companies to net over 100 million yuan: a total of 19 companies achieved a combined net profit of 6.301 billion yuan, up 4.01% year-on-year. Among them, 14 companies saw an increase in net profit, while 5 experienced a decline, one more than those with negative revenue growth, but still considered good performance.

Among the 19 enterprises, Yutong Technology achieved a net profit of 1.409 billion yuan, slightly down 2.05% year on year.Despite the decline, Yutong is still the only company in the industry with publicly available data that has made a net profit of more than $1 billion, far ahead of its peers.

The net profits of Zijiang Enterprise and Aoruijin both exceeded 500 million yuan, reaching 809 million yuan and 791 million yuan respectively, with one increasing by 44.55% year-on-year and the other by 2.06%.

The net profits of Yongxin and Shengxing were basically the same. The former was 468 million yuan, up 14.63% year on year; the latter was 423 million yuan, up 27.10% year on year.

In 2024, COFCO Packaging, which was targeted by Baosteel Group and Aorijin, achieved a net profit of 303 million yuan, down 37.53% year on year.

Mingyisen's net profit rose 43.61 percent year on year to 282 million yuan, the highest since 2020, but still far behind 2019's 535 million yuan.

Net profit of 19 enterprises (unit: billion yuan)

The net profit of the remaining 12 enterprises is less than 200 million yuan.

Lions Mountain Group, which is based in Hong Kong, posted a net profit of HK $214 million, or about 199 million yuan, up 15.74 percent year on year.

Xinjufeng, whose revenue decreased slightly, achieved a net profit of 184 million yuan, up 8.03% year on year; Jiamai Packaging, whose revenue increased slightly, achieved a net profit of 183 million yuan, up 18.78% year on year.

Jihong Shares, whose revenue fell due to the impact of cross-border e-commerce business, posted a net profit of 182 million yuan, down 47.28 percent year on year.

Baosteel Packaging, once hopeful of joining forces with COFCO Packaging to challenge the dominant position of Aorijin, posted a net profit of 172 million yuan, down 21.13% year on year.

Benefiting from the growth of tobacco pipe business and cigarette orders outside the province, Yongji achieved a net profit of 160 million yuan, up 59.77% year on year.

Donggang Shares achieved net profit of 158 million yuan, down 3.36% year on year; Zhongrong Shares achieved net profit of 144 million yuan, down 29.60% year on year.

The net profit of Junshe Group was HK $129 million, or about RMB 120 million, up 61.20% year on year, mainly benefiting from increased market demand, economies of scale and optimization of production and operation efficiency.

Chuangyuan achieved a net profit of 108 million yuan, up 40.65% year on year, mainly benefiting from the expansion of revenue scale.

The net profit of Dashengda was 106 million yuan, up 20.00% year on year; the net profit of Jiangtian Technology was 102 million yuan, up 5.55% year on year.

How many have a net profit margin of more than 20%?

The answer: zero, not a single one of the 19 companies.

From this point of view, as some bosses say, "this industry earns 40-60%", at least for these 19 enterprises, it is still very challenging.

Not to mention 40-60%, not even one of the bosses who said "20-30% is good enough" can achieve it.

Among the 19 companies, the one with the closest net profit margin to the "good" passing line of 20% is Jiangtian Technology, which has the smallest revenue volume, at 18.92%, down 0.08 percentage points year on year.

Secondly, Yongji Shares, whose revenue volume is only higher than Jiangtian Technology, has a net profit margin of 17.68%, an increase of 5.43 percentage points year-on-year.

Net profit margin of 19 companies

In addition, four companies had net profit margins of more than 10 per cent.

Donggang Shares and Yongxin Shares were 13.40% and 13.27%, respectively, with one down 0.20 percentage points year-on-year and the other up 1.19 percentage points year-on-year.

Xinjufeng and Junsisi Group were 10.78% and 10.66%, respectively, with year-on-year increases of 0.98 percentage points and 2.95 percentage points.

Among the four enterprises, Xinjufeng, Donggang Shares and Junsisi Group also have relatively small revenue volume, ranking before Yongji Shares and Jiangtian Technology, ranking 15th to 17th.

In other words, five of the top six companies in terms of net profit margin had the lowest revenue volume among the 19 companies.

It seems that there is a negative correlation between revenue volume and net profit margin. The smaller the volume, the easier it is to obtain higher net profit margin. On the contrary, the larger the volume, the more difficult it is to obtain higher net profit margin. However, nothing is certain.

For example, Yutong Technology, which leads the industry in terms of revenue volume, saw its net profit margin reach 8.21%, down 1.24 percentage points year on year, but still ranked seventh among the 19 companies.

In addition, the net profit margin of Lion Mountain Group was 8.03%, up 0.80 percentage points year on year; the net profit margin of Zijiang Enterprise and Meiyin Sen was 7.60% and 7.03% respectively, up 1.46 percentage points and 1.45 percentage points year on year.

The net profit margin of the three printing and iron can enterprises, Shengxing Shares, Aoruijin and Jiamai Packaging, is basically the same, which are 5.94%,5.78% and 5.73% respectively, and all of them are on the upward trend, increasing by 1.25 percentage points, 0.18 percentage points and 0.83 percentage points year-on-year.

The net profit margin of Chuangyuan Shares, which mainly does external orders, and Zhongrong Shares, which mainly does internal orders, was close to each other, at 5.57% and 5.16% respectively, down 0.08 percentage points and 2.71 percentage points year-on-year.

The net profit margin of the remaining four companies is below 5%.

Dasha was 4.99%, up 0.59 percentage points year on year; Jihong was 3.29%, down 1.86 percentage points year on year..

The net profit margin of the two printing and iron can enterprises, COFCO Packaging and Baosteel Packaging, was the lowest, at 2.74% and 2.07% respectively, down 1.99 percentage points and 0.75 percentage points year-on-year.

As a whole, the average net profit margin of the 19 companies was 6.36 percent, down 0.11 percentage points year on year.After looking at the net profit margin of 19 leading companies in the industry, I wonder if the boss will still think that "this business earns 40-60%"?

Of course, if the leading companies in the industry can't make money, it doesn't mean that other companies can't achieve it.In many cases, there is indeed a negative correlation between revenue volume and net profit margin.

Bosses can't expect to make $100 million by selling $200 million, but they can expect to make $50 by selling $100.

According to Sanhao students, if the bosses place an order at a quick print shop, the gross profit rate of the quick print shop is usually more than 50%, or even as high as 80 or 90 percent.

The problem is: such gross profit rate should cover rent, labor and other rigid expenses. For the quick printing shop with annual revenue of more than 1 million yuan, the probability of achieving 40%-60% net profit margin is indeed greater than that of large-scale printing and packaging enterprises, but not every or most enterprises can achieve it.

Most of the time, a 5% net profit margin is not low; it can reach more than 10%, which is considered high in the industry. Right?

That's it. Finally, I wish the bosses good luck.