Investment Rating - The report maintains a "Buy" rating for Nine Dragons Paper (02689) [3] Core Views - Nine Dragons Paper's FY2024 performance met expectations with revenue of RMB 59.496 billion, up 4.9% YoY, and net profit attributable to shareholders of RMB 751 million, turning from a loss to a profit [3] - The company achieved a sales volume of 19.6 million tons, up 18.3% YoY, with a profit per ton of RMB 38 [3] - In H2 FY2024, revenue was RMB 28.885 billion, up 13.1% YoY, with net profit attributable to shareholders of RMB 458 million and a profit per ton of RMB 48 [3] - The company's strategic layout in pulp-paper integration and product diversification is gradually showing results, with significant improvement in profitability [3] - The company's capacity expansion is progressing, with new capacities in chemical pulp, mechanical pulp, and cultural paper expected to further stabilize profitability [3] Financial Performance - FY2024 revenue breakdown by product: corrugated paper RMB 33.035 billion (+17.7% YoY), white board paper RMB 8.148 billion (-4.1% YoY), cultural paper RMB 4.134 billion (-12.0% YoY) [3] - FY2024 sales volume breakdown: corrugated paper 11.1 million tons (+32.9% YoY), white board paper 2.7 million tons, cultural paper 0.7 million tons [3] - The company's debt-to-asset ratio rose to 65.0% at the end of FY2024, up 2.4 percentage points YoY, due to large-scale capacity expansion [3] - FY2024 operating cash flow was a net outflow of RMB 794 million, but improved significantly in H2 with a net inflow of RMB 1.719 billion [5] Future Outlook - The company plans capital expenditure of RMB 12.8 billion in FY2025, similar to FY2024, with expectations of a gradual improvement in the debt-to-asset ratio from FY2026 onwards [3] - The company's profit per ton is expected to continue improving, supported by pulp-paper integration and product diversification strategies [3] - The report forecasts FY2025-2027 net profit attributable to shareholders at RMB 1.444 billion, RMB 2.234 billion, and RMB 3.243 billion, respectively, with PE ratios of 10.9X, 7.1X, and 4.9X [5] Industry Analysis - The paper industry is expected to see improved supply-demand dynamics as downstream demand recovers, import paper impact eases, and leading paper companies slow down new capacity additions [5] - Leading companies with advantages in raw materials, scale, and management are expected to continue consolidating the market [5]

Financial Performance - Sales volume increased by approximately 18.3%[2] - Revenue rose by approximately 4.9% to RMB 59,496.4 million, primarily due to the increase in sales volume for the fiscal year 2024[2] - Gross profit surged by approximately 273.2% to RMB 5,711.5 million[2] - Profit attributable to equity holders of the company for the fiscal year 2024 was approximately RMB 750.7 million[2] - Basic earnings per share for the fiscal year 2024 were approximately RMB 0.16[2] - The company reported a total comprehensive income of RMB 523.4 million for the fiscal year 2024, compared to a loss of RMB 2,275.1 million in the previous year[5] - The company reported a net profit of RMB 793,890 thousand for the year ending June 30, 2024, compared to a net loss of RMB (2,370,839) thousand in the previous year, indicating a significant turnaround[9] - The operating profit for fiscal year 2024 was approximately RMB 2,645.1 million, a turnaround from an operating loss of RMB 1,595.2 million in fiscal year 2023[48] - The company's net profit attributable to equity holders for fiscal year 2024 was approximately RMB 750.7 million, compared to a net loss of RMB 2,383.4 million in fiscal year 2023[51] Assets and Liabilities - Total assets increased to RMB 138,371.5 million from RMB 120,651.0 million year-on-year[8] - Non-current assets, including property, plant, and equipment, rose to RMB 95,462.9 million from RMB 86,557.2 million[7] - Total liabilities increased to RMB 89,887.0 million from RMB 75,514.6 million year-on-year[8] - Long-term bank and other loans increased to RMB 52,326.7 million as of June 30, 2024, compared to RMB 43,180.7 million in the previous year[37] - The company’s total loans reached RMB 67,179.1 million, an increase from RMB 56,773.3 million in the previous year[37] Cash Flow and Expenses - Cash and cash equivalents stood at RMB 10,560.7 million, compared to RMB 10,317.5 million in the previous year[7] - The company reported a net cash outflow from operating activities of RMB (794,199) thousand, a significant decrease from RMB 6,924,487 thousand in the previous year[9] - Financial expenses increased to RMB (1,568,765) thousand from RMB (1,288,915) thousand, indicating a rise of approximately 21.7% year-over-year[16] - The company incurred operating expenses of RMB 48,463,322 thousand for raw materials and consumables, compared to RMB 45,959,412 thousand in the previous year, which is an increase of approximately 5.5%[15] - The total interest and financing costs rose from RMB 2,035.8 million in the previous fiscal year to approximately RMB 2,317.0 million in the current fiscal year[58] Inventory and Receivables - The company’s total inventory as of June 30, 2024, was RMB 10,169,308,000, an increase from RMB 8,855,674,000 in the previous year[30] - The inventory level rose by approximately 14.8% to about RMB 10,169.3 million as of June 30, 2024, with raw materials accounting for approximately RMB 6,303.8 million[52] - As of June 30, 2024, accounts receivable and notes receivable amounted to RMB 8,482.3 million, an increase of approximately 90.2% compared to RMB 4,460.1 million as of June 30, 2023[53] - Accounts receivable from trade increased to RMB 3,565.7 million as of June 30, 2024, up from RMB 3,086.4 million the previous year[32] Corporate Governance - The board of directors consists of eight executive directors and four independent non-executive directors[66] - The company is led by Chairwoman Zhang Yin[66] - The company emphasizes its commitment to corporate governance[66] - The board composition reflects a balance between executive and independent oversight[66] - The company aims to enhance transparency and accountability[66] Strategic Initiatives - The company is focused on expanding its market presence in the packaging paper and specialty paper sectors, leveraging its production capabilities to enhance revenue growth[10] - The company plans to increase its annual production capacity by 3.70 million tons for white card paper and cultural paper, with completion expected between Q3 2024 and Q2 2025[42] - The company has ongoing expansion projects, including a new pulp production capacity of 1.10 million tons in Beihai, Guangxi, expected to be completed in Q3 2024[40] - The company plans to balance production and sales while enhancing technological innovation and resource integration to provide differentiated high-quality products[59] Dividends - The company did not recommend a final dividend for the year ended June 30, 2024, consistent with no dividend declared in the previous year[26] - The company has decided not to declare any interim or final dividends for the fiscal year ending June 30, 2024[60] Market Performance - The company reported a significant sales volume increase of 18.3% year-on-year, with total sales revenue rising by 4.9% to RMB 59,496.4 million[39] - Sales of packaging paper reached RMB 54,609,046 thousand, up from RMB 51,009,294 thousand, reflecting an increase of about 5.1% year-over-year[14] - The company's sales revenue for the fiscal year 2024 was approximately RMB 59,496.4 million, an increase of about 4.9% compared to fiscal year 2023[43] - The sales volume reached approximately 19.6 million tons, an increase of about 18.3% from 16.6 million tons in fiscal year 2023[43]

Summary of Conference Call Company/Industry Involved - The conference call involves 九龙职业 (Jiulong Vocational) and its recent developments [1] Core Points and Arguments - The speaker, 温总 (Mr. Wen), introduced the current situation and recent updates regarding the company [1] Other Important but Possibly Overlooked Content - The call emphasizes the importance of communication and updates with stakeholders [1]

Investment Rating - Buy rating is assigned to the company, with a target price of HKD 3.21 [4] Core Views - The company is the global leader in paper production capacity, with significant scale effects and strong upward elasticity [6] - The company's profitability is on a continuous improvement trajectory, driven by the gradual commissioning of raw material production capacity, easing of capital expenditures, and falling coal prices [2] - The company is expected to achieve net profits of RMB 676 million, RMB 1.911 billion, and RMB 2.791 billion in FY2024, FY2025, and FY2026, respectively, with significant year-on-year growth [6] Industry Overview - The boxboard and corrugated paper industry is in a weak supply-demand balance, with raw materials forming a competitive barrier [2] - Demand for boxboard and corrugated paper is slowly recovering, with economic relevance and indirect exports contributing to demand [2] - Supply-side improvements are expected in 2024, with limited new capacity additions and a focus on high-end boxboard paper [2] - The industry's operating rate is projected to be 63.6% in 2024, up 0.7 percentage points year-on-year, indicating a slight improvement in supply-demand dynamics [2] Company Analysis - The company has a leading position in the boxboard and corrugated paper industry, with a 23.4% market share in 2022 [2] - The company has a well-established domestic and overseas production base layout, with significant transportation advantages [2] - The company's raw material production capacity is gradually coming online, reshaping its integrated industrial chain advantage [2] - Capital expenditures are slowing, and capacity utilization is improving, which will help reduce depreciation and financial pressure [2] - Falling coal prices are expected to enhance the cost advantage of the company's self-owned power plants [2] Financial Projections - Revenue is expected to grow to RMB 59.832 billion, RMB 69.404 billion, and RMB 78.835 billion in FY2024, FY2025, and FY2026, respectively [3] - Net profit is projected to turn positive in FY2024, with significant growth in FY2025 and FY2026 [3] - The company's PE ratios for FY2024-2026 are estimated at 20.2x, 7.1x, and 4.9x, respectively, with a PB ratio of 0.31x, indicating undervaluation [6] Key Assumptions - Sales volume is expected to grow steadily, reaching 19.22 million tons, 21.21 million tons, and 23.37 million tons in FY2024-2026, respectively [9] - Gross margins are projected to improve, reaching 9.3%, 10.7%, and 11.3% in FY2024-2026, respectively [9] - Tonnage profits are expected to increase, with tonnage gross profits of RMB 289, RMB 350, and RMB 382 in FY2024-2026, respectively [9] Differentiating Factors - The market has overlooked the company's operational improvements, focusing more on industry beta [10] - The company's high-profit product mix is gradually increasing, and its product matrix is becoming more diversified, which will enhance profitability and stability [10] - Capital expenditures are expected to slow after FY2024, and the debt-to-asset ratio is projected to improve starting in FY2025 [10] - Falling coal prices will enhance the cost advantage of the company's self-owned power plants [10]

Investment Rating - The report initiates coverage with a "Buy" rating for the company [3][5]. Core Views - The company is positioned as a leading player in the packaging paper industry, with expectations for profit elasticity due to improving industry supply-demand dynamics, quality raw materials, and reduced capital expenditure pressures [3][8]. - The projected net profit for FY2024-2026 is estimated at 780 million, 2.68 billion, and 3.35 billion RMB, respectively, indicating a turnaround from negative to positive growth of +242% and +25% year-on-year [3][12]. Financial Summary - Revenue for the company from 2020 to 2026 is projected to grow from 51.34 billion RMB in 2020 to 80.81 billion RMB in 2026, with a notable decline of 12% in 2023 followed by a recovery [2][11]. - Gross profit is expected to improve from 1.53 billion RMB in 2023 to 9.54 billion RMB in 2026, reflecting a recovery in profitability [2][10]. - The company’s net profit is forecasted to recover from a loss of 238 million RMB in 2023 to 3.35 billion RMB in 2026, showcasing significant growth potential [2][12]. Industry Position - The company is recognized as the largest producer of boxboard paper in Asia, with a diverse product line including various types of packaging paper and a strong market presence in mainland China [15][19]. - The company has a well-established supply chain, covering upstream raw materials and downstream packaging factories, which enhances its competitive edge [3][8]. Growth Outlook - The report highlights that the peak of capital expenditure has passed, with expectations for a reduction in depreciation pressure and an increase in profit margins as the company enters a harvest phase [28]. - The company’s sales structure indicates that 49.5% of revenue comes from card paper products, with a strong focus on high-strength corrugated core paper and coated gray bottom whiteboard paper [18][19]. Valuation - The target price for the company is set at 4.4 HKD per share, based on a cautious approach using both PE and PB valuation methods [13][14].

Financial Performance - The company reported a significant increase in revenue, achieving a total of HKD 10.5 billion for the interim period, representing a 15% year-over-year growth[2]. - The Group achieved a sales volume increase of 16.3% to 10.0 million tonnes during the period, marking a record high[41]. - Revenue for the six months ended December 31, 2023, was RMB 30,611,229, a decrease of 1.9% compared to RMB 31,198,020 in the same period of 2022[95]. - Gross profit for the period was approximately RMB 2,705.6 million, an increase of approximately RMB 2,019.5 million or 294.4% compared to RMB 686.1 million in the corresponding period last year[51]. - Operating profit for the Period was approximately RMB 1,243.5 million, a significant increase from an operating loss of RMB 861.6 million in the corresponding period last year[52]. - Profit attributable to the equity holders of the Company amounted to approximately RMB 292.4 million, compared to a loss of RMB 1,388.8 million in the same period last year, mainly due to an increase in gross profit margin[55]. - The gross profit margin improved to 25%, up from 22% in the previous year, reflecting better cost management and pricing strategies[2]. Market Expansion and Product Development - User data indicates a growing customer base, with an increase of 12% in the number of active clients compared to the previous year[2]. - The company has provided a positive outlook for the next quarter, projecting a revenue growth of 10% to 12% based on current market trends and demand[2]. - New product development includes the introduction of eco-friendly kraftlinerboard made from 100% recycled paper, catering to environmentally conscious customers[6]. - The company is expanding its market presence in Southeast Asia, targeting a 20% increase in market share within the next fiscal year[2]. - A strategic acquisition of a local competitor is planned, which is expected to enhance production capacity by 15%[2]. - The company is investing in new technology to improve production efficiency, aiming for a 10% reduction in operational costs by the end of the fiscal year[2]. - The company aims to enhance product differentiation and tap into high-end markets to increase market share[41]. Sustainability and Environmental Commitment - The management emphasized a commitment to sustainability, with plans to increase the use of recycled materials in production to 50% by 2025[2]. - The Group's greyboard products, made from recycled waste paper, are classified into Land Dragon and Sea Dragon to cater to different customer needs[20]. - Uncoated woodfree paper and office paper are offered in weights of 40 to 80g/m2, with the latter being made from 100% recycled fiber for environmental sustainability[24][25]. - The Group's sales of recycled products qualified for an incentive tax arrangement, allowing a deduction of 10% from taxable income starting January 1, 2021[192]. Financial Position and Cash Flow - As of December 31, 2023, total assets amounted to RMB 128,912,302, an increase from RMB 120,651,004 as of June 30, 2023[91]. - Total liabilities rose to RMB 83,702,803 from RMB 75,514,582 as of June 30, 2023[92]. - The company had bank and cash balances, short-term bank deposits, and restricted cash amounting to approximately RMB 7,435.5 million as of December 31, 2023, with total undrawn bank facilities of approximately RMB 42,323.8 million[57]. - The net decrease in cash and cash equivalents for the period was RMB (3,032,656) thousand, compared to RMB (1,354,546) thousand in the same period of 2022[106]. - The company reported a significant decrease in cash flows from investing activities, primarily due to payments for property, plant, and equipment totaling RMB (6,602,715) thousand[104]. Governance and Risk Management - The company continued to comply fully with the Corporate Governance Code as set out in Appendix C1 to the Listing Rules[58]. - The company has established a Risk Management Committee to oversee risk management and internal control processes[63]. - The Group's financial activities are exposed to various risks, including foreign exchange risk, interest rate risk, credit risk, and liquidity risk[115]. - The Group aims to maintain sufficient cash and cash equivalents and committed credit facilities to manage liquidity risk effectively[119]. - The Group has not made any changes to its risk management policies during the six months ended December 31, 2023[115]. Shareholder Information - As of December 31, 2023, the total number of ordinary shares issued by the company is 4,692,220,811[75]. - Ms. Cheung Yan and Mr. Liu Ming Chung each hold a total of 3,113,811,942 shares, representing approximately 66.36% of the company's total shareholdings[74]. - The Board has resolved not to declare an interim dividend for the six months ended 31 December 2023, consistent with the previous year where no dividend was declared[69].

证券研究报告 ＃industryId＃ 造纸 公 司 跟 踪 报 告 | --- | --- | |----------------------------|--------------------------------| | | | | ＃市场数据 marketData ＃ | | | 日期 | 20240306 | | 收盘价（港元） | 3.46 | | 总股本（亿股） | 47 | | 流通股本（亿股） | 47 | | 净资产（亿元） | 499 | | 总资产（亿元） | 1,423 | | 每股净资产（元） | 11.81 | | 数据来源： Wind | ，兴业证券经济与金融研究院整理 | ＃相关报告 relatedReport＃ 海外原材料研究 分析师：韩亦佳 SFC：BOT963 SAC：S0190517080003 hanyij@xyzq.com.cn ＃investSuggestion＃ 增持 ( ＃ investS uggesti onChan ge＃ 首次 ） ＃ dyStockco de＃ 02689.HK ＃玖龙纸业 dyCompany＃ 港股通（沪/深） 盈利修复，成本控制 ...

Investment Rating - The report assigns a "Buy" rating to the company with a target price of HKD 4.57, indicating a potential upside of 25.9% from the current price of HKD 3.63 [2][6][18]. Core Insights - The company has achieved a turnaround to profitability, reporting a net profit of RMB 2.92 billion in 1HFY24, compared to a net loss of RMB 13.89 billion in the same period last year. This aligns with previous profit forecasts [3][10]. - The successful commissioning of new plants in Beihai and Malaysia has led to a double-digit growth in sales volume, which increased by 16.3% year-on-year to 10 million tons in 1HFY24 [4][13]. - Capital expenditures are expected to gradually decline as the company continues to advance its integrated pulp and paper strategy, enhancing its vertical supply chain advantages [5][17]. Financial Performance Summary - For 1HFY24, the company recorded operating revenue of RMB 30.611 billion, a slight decrease of 1.9% year-on-year. However, gross profit surged by 294.4% to RMB 2.706 billion, with a gross margin improvement of approximately 6.6 percentage points to 8.8% [3][10]. - The company’s annual paper production capacity reached 21.12 million tons by the end of 2023, an increase of 2.35 million tons year-on-year [4][13]. - The projected earnings per share (EPS) for the fiscal years 2024, 2025, and 2026 are expected to be RMB 0.21, RMB 0.52, and RMB 0.70, respectively [6][18].

Financial Performance - The group's sales increased by 16.3% to approximately 10.0 million tons[2] - Revenue decreased by 1.9% to approximately RMB 30,611.2 million[2] - Gross profit increased by 294.4% to approximately RMB 2,705.6 million[2] - Profit attributable to equity holders of the company was approximately RMB 292.4 million[2] - Basic earnings per share increased to approximately RMB 0.06[5] - Operating profit for the period was RMB 1,243.5 million, compared to a loss of RMB 861.6 million in the previous year[4] - The company reported a comprehensive income of RMB 73.1 million, compared to a loss of RMB 1,619.0 million in the previous year[6] - Revenue for the six months ended December 31, 2023, was RMB 30,611,229 thousand, a decrease of 1.9% compared to RMB 31,198,020 thousand for the same period in 2022[15] - The company reported a profit attributable to equity holders of RMB 292,436,000 for the six months ended December 31, 2023, compared to a loss of RMB 1,388,795,000 for the same period in 2022[25] - Basic earnings per share for the six months ended December 31, 2023, was RMB 0.06, recovering from a loss of RMB 0.30 in the same period of 2022[25] Assets and Liabilities - Total assets increased to RMB 128,912.3 million from RMB 120,651.0 million[8] - Total liabilities rose to RMB 83,702.8 million from RMB 75,514.6 million[8] - The company’s non-current assets increased to RMB 97,287.4 million from RMB 91,196.5 million[7] - As of December 31, 2023, the company's long-term bank and other loans amounted to RMB 47,750,687 thousand, an increase from RMB 43,180,730 thousand as of June 30, 2023[14] - The company's trade payables increased to RMB 12,221,264 thousand as of December 31, 2023, compared to RMB 9,648,322 thousand as of June 30, 2023[33] Inventory and Receivables - Inventory as of December 31, 2023, was RMB 9,410,876,000, up from RMB 8,855,674,000 as of June 30, 2023[27] - The company recognized a reversal of previously written down inventory amounting to RMB 268,777,000 during the six months ended December 31, 2023[28] - Trade receivables as of December 31, 2023, amounted to RMB 3,360,052,000, an increase from RMB 3,086,387,000 as of June 30, 2023[29] - The company reported an expected credit loss of RMB 19,111,000 on trade receivables for the six months ended December 31, 2023, compared to no losses in the same period of 2022[31] - The company's total inventory write-down to net realizable value was RMB 58,653,000 for the six months ended December 31, 2023[28] Expenses and Taxation - Employee benefit expenses increased to RMB 2,021,605 thousand, up 3.9% from RMB 1,946,290 thousand in the prior year[16] - Total income tax expense for the six months was RMB 295,418 thousand, compared to a tax credit of RMB 43,005 thousand in the same period last year[18] - The effective corporate income tax rate for subsidiaries in mainland China is 25%, with some qualifying for a reduced rate of 15%[19] - Administrative expenses decreased by approximately 11.9% to about RMB 1,079.3 million, representing 3.5% of total revenue[43] Production and Capacity - The total designed annual production capacity for fiber raw materials is 4.72 million tons, with 2.17 million tons of pulp, 0.70 million tons of recycled pulp, and 1.85 million tons of wood fiber[36] - The company plans to increase its total designed annual production capacity for fiber raw materials to 7.04 million tons, including 4.07 million tons of pulp and 2.27 million tons of wood fiber[37] - The company is on track to complete new production capacity projects, including 1.70 million tons of pulp and 2.00 million tons of paper by 2025[38] Risk Management and Outlook - The company has effectively improved profitability through optimized raw material structure and cost reduction measures[36] - The company has reduced operational, currency, and cash flow risks to a minimum through enhanced risk management[36] - The outlook for the second half of the fiscal year is optimistic due to the implementation of national stimulus policies, which are expected to boost consumer confidence and demand in the packaging paper industry[54] - The company will consider timely arrangements for currency and interest rate hedging to mitigate associated risks due to current currency market volatility[53] Corporate Governance - The group has adopted new accounting standards effective from July 1, 2023, with no significant impact on performance or financial position[12] - The company has complied with the corporate governance code as per the listing rules during the reporting period[57] - The audit committee has reviewed the accounting principles and internal controls adopted by the group during the period[56] Dividends - The company did not declare an interim dividend for the six months ended December 31, 2023, consistent with the previous year[26] - The board has decided not to declare an interim dividend for the six months ended December 31, 2023, consistent with the previous year[55]

智通财经APP获悉，玖龙纸业(02689)盘中涨近7%，截至发稿，涨5.99%，报3.36港元，成交额3061.13万 港元。 消息面上，据生意社消息，2月1日，玖龙纸业多基地发布春节后上调纸价的通知，自2月22日(正月十 三)起，旗下东莞、太仓、天津、沈阳、湖北六大基地牛卡、再生、瓦纸上调30元/吨。这是一周内玖龙 公司发出的第二轮涨价函。此前，玖龙也发出涨价通知，宣布自2月1日起，旗下东莞、太仓、天津、沈 阳、湖北、重庆七大基牛卡芯纸普涨30元/吨。 浙商证券指出，FY24H1扭亏为盈，盈利中枢向上修复。24Q1春节停机检修市场供应量减少，预计价格 及吨盈利存在一定支撑。进口冲击趋于平滑、国内需求弱补库预期下，24年盈利或震荡修复。2024 年 进口零关税维持，国内龙头维持压缩产业链利润策略，在国内需求弱补库、纸价弱震荡预期下，2024年 进口纸增量将趋于平滑，预计盈利及价格中枢随需求波动震荡。 ...