Core Viewpoint - CICC has raised its earnings forecast for Nine Dragons Paper (02689) for FY25-26 by 25% and 49% to 1.8 billion and 2.5 billion HKD respectively, citing better-than-expected self-produced pulp cost advantages [1] Group 1: Earnings and Performance - The company expects FY25 earnings to be between 2.1 billion and 2.3 billion HKD, representing a year-on-year increase of 165% to 190%, with net profit attributable to shareholders projected at 1.7 billion to 1.9 billion HKD, up 126% to 153% [1] - CICC maintains an "outperform" rating for the industry and has raised the target price by 33% to 6.0 HKD, which implies an 11% upside potential [1] Group 2: Production and Capacity - For FY25, the company is estimated to produce 21 million tons of paper, a 10% increase year-on-year, with a focus on expanding the pulp paper category and enhancing raw material layout [2] - The company plans to invest in new production bases in Guangxi and Hubei, with a total production capacity expected to exceed 30 million tons by the end of FY25 [2] Group 3: Cost Management - The core reason for the better-than-expected performance is attributed to a significant reduction in costs, particularly in self-produced pulp, and a notable decline in coal prices [3] - The average prices for various paper types have decreased, with boxboard paper, double glue paper, and white card paper down by 4%, 9%, and 7% respectively [3] Group 4: Capital Expenditure and Debt - The company is entering a new phase of high capital expenditure, with FY25 capital spending expected to exceed 13 billion HKD [4] - There is a need to monitor the company's debt levels closely, as capital expenditures may remain relatively high in FY26 [4]
中金：维持玖龙纸业跑赢行业评级 升目标价至6港元