(Yicai Global) Aug. 15 -- Shanying International Holdings Co. [SHA:600567], a leading Chinese company engaged in the manufacture and distribution of paper products, has released its financial report for the first half of this year ahead of other companies in its market. 

Operating income rose by 38.1 percent to nearly USD1.1 billion (CNY7.46 billion) in the period while net profit attributed to shareholders jumped 450.95 percent to USD121 million.

The firm's average net profit growth was projected to be as high as 443.48 percent through synthesizing interim earnings forecasts of its publicly traded paper manufacturers, Securities Daily said. Among them, Fujian Qingshan Paper Industry Co. [SHA:600103] expects to record the biggest net profit increase of 1,930 percent, and net profit could hit USD8.82 million (CNY60 million).

The country's Ministry of Environmental Protection recently notified the World Trade Organization that the government would ban imports of 24 solid wastes, split into four categories, including such high-pollution waste as unsorted paper and raw textiles.

Major listed paper makers imported a total of 28.5 million tons of foreign waste paper last year, of which Nine Dragons Paper Holdings Ltd. [HKG:2689] imported 12.8 million tons, Lee & Man Paper Manufacturing Ltd. [HKG:2314] imported 4.86 million tons and Shanying imported 1.76 million tons.

All leading players have maintained solid partnerships with waste paper exporters in North America and there remains a strong possibility that they will secure import permissions from the government. The ban may only affect smaller companies that rely on third-party trade merchants for importing waste paper. The policy will squeeze their profitability, and major players will be able to further increase their market shares accordingly.

The government has ratcheted up environmental regulation efforts this year. The environmental ministry required all paper producers to obtain a pollutant discharge permit by the end of June, and financial penalties will be imposed on companies discharging pollutants without it.

With the introduction of the pollutant discharge permit, special inspections on processors of imported waste and other environmental regulations, market insiders predict small- to medium-sized paper manufacturers will be forced out of business, and the resulting increase in market concentration will benefit industry leaders and translate into significant improvements in their earnings.