Stock Guru Profile DRGG
Equity Stock Analysis Report on Dragon International
A look at the market in China for packaging products:
Dragon International Group Corp. (OTCBB: DRGG) is a leading paper manufacturer engaged in the manufacturing and distribution of packaging material and paper products in China. The Company operates through its wholly owned subsidiary Ningbo Anxin International Trade Co. Ltd. situated in Ningbo, Zhejiang Province, China. Ningbo Anxin has four subsidiaries through which it manufactures and distributes packaging material and paper products to the cigarette, cosmetics, alcohol, pharmaceutical and gifts industry.
China now has the world’s second largest market for paper and board (after the U.S.), with sales annually exceeding US$20 billion and has further growth potential. Annual per capita consumption of paper products is around 90 Ib compared with over 650 Ib in the U.S. Industry sources predict by the end of the decade, China will need 70 million tons of paper and board a year – 32% more than in 2004.
The paper and paper products industry is highly competitive. The paper industry in China is not dominated by any one firm and the dynamics of the industry makes it possible for everyone to participate competitively. Dragon International focuses on high quality packaging products where demand exceeds supply and excess demand is met by imports.
The global paper market is in the growth phase. China is the second highest consumer of paper and paperboard products. The country has a lack of supply and a rapidly growing demand. From 1991 to 2002, the consumption of paper and paperboard grew at 8.94% and 9.57% annually in China, respectively. The production and consumption of paper and paperboard in China is second only to the United States.
The growing demand in the Chinese market and the support from government policy created the opportunity for industry expansion. In 2001, paper and paperboard product consumption reached 42.6 million metric tons, increasing at an average annual rate of 10.38% over the last two decades. In contrast, the consumption in the US over the same period was at a rate of 1.85%.
Imports to China account for close to 15% of the total consumption in the country. It has been noted that approximately 80% of the country’s production capacity is middle and low end paper. This major segment of the paper industry experiences low margin competition. There is a gap between demand and supply in the high end paper market in China. This represents a potential market with high margins and diminished competition. In 1995, China imported 5.57 million tons of paper and paperboard products. This roughly doubles the 1995 import.
China has recently developed a plan for forestry and pulp mill enhancement, which is scheduled to cost around $25 billion through 2010. The purpose of this plan is to encourage the development of 12.5 million acres of plantations in South east China, and 42 large scale pulp and paper mills. China’s forests are concentrated in the northeast and southwest part of the country, and thus deforestation would not be required.
The country’s current production capacity is 47.3 million tons, but it is expected to grow by an extra 6 million tons by 2010. This is a clear indicator of China’s larger plan of switching from a nonwood to a wood fiber base. It is expected that the country’s dependence on pulp products and recovered fiber will increase.
The quality of solid beached sulphate (SBS) paperboard produced in the country has improved. China also believes that the demand for Hank Kong CCB (cast coated board) will remain strong, providing the paper industry a strong environment in which to flourish. Dragon International Group Corp operates in this flourishing industry, with very little competition posed to it from rival companies.
It is for all these reasons that Equity Stock Analysis has placed a sixty cent target on DRGG. Be sure to read the report: Equity Stock Analysis Report on DRGG
Source: DRGG
Contact:
DRGG – Dragon International Group Corp.
Bldg 14, Suite A09
29 Dongdu Road
International Trading Center
Ningbo, 315000 China
Website: http://www.drgg.net
Phone: 86-574-56169308
Fax: 86-0574-56169378
SOURCE: Dragon International Group Corp.
About Dragon International Group Corp. Dragon International Group Corp. (OTCBB: DRGG) is one of China’s leading manufacturers and distributors of specialty paper products and packaging materials. DRGG is operating as a manufacturer and distributor of paper and integrated packaging paper products. DRGG has a distribution network covering east and central China. Dragon and its subsidiaries have cultivated strategic relationships with several of the world’s largest and well-known manufacturers of paper and specialty packaging products. For more information, please visit http://www.drgg.net.
SafeHarborand Forward Looking Statement: Certain statements set forth in this article constitute “forward-looking statements.” Forward-looking statements include, without limitation, any statement that may predict, forecast, indicate, or imply future results, performance or achievements. Such statements are not guarantees of future performance and are subject to risks and uncertainties that could cause the company’s actual results and financial position to differ materially from those included within the forward-looking statements, including the Company’s ability to obtain sufficient financing to fund both its internal growth opportunities and acquisition strategy. More information about the potential risks and factors that could affect the Company’s business and financial results is included in the Company’s filings, available via the United States Securities and Exchange Commission at http://www.sec.gov/.
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