Core Viewpoint - CICC has raised the net profit estimates for Nine Dragons Paper Holdings Limited (02689) for FY26 and FY27 by 11% and 15% to 2.75 billion and 2.88 billion HKD respectively, maintaining an outperform rating and increasing the target price by 17% to 7 HKD [1] Group 1: Financial Performance - For FY25, the company achieved revenue of 63.241 billion HKD, a year-on-year increase of 6.3%, with a net profit attributable to shareholders of 1.767 billion HKD, aligning with prior forecasts [1] - In the second half of FY25, the net profit attributable to shareholders reached 1.297 billion HKD, a quarter-on-quarter increase of 176%, primarily due to the benefits from self-produced pulp and reduced coal prices [1] Group 2: Production and Sales - The company reported total sales of 21.5 million tons for FY25, a year-on-year increase of 10%, with significant contributions from the production of corrugated paper, white card paper, and cultural paper [2] - The company has already launched 1.2 million tons of white card paper, 350,000 tons of cultural paper, and 700,000 tons of chemical pulp in the first half of FY26, with plans for additional production [2] Group 3: Market Outlook - The company is optimistic about the paper price recovery, estimating profits per ton of paper at 59 HKD and 151 HKD for the first and second halves of FY25 respectively, supported by improved industry demand and rising prices of recycled paper [3] - The company anticipates a slight recovery in profits for corrugated paper from July to September, despite potential increases in costs due to rising coal and recycled paper prices [3] Group 4: Capital Expenditure - The capital expenditure for FY25 was 14.8 billion HKD, a year-on-year increase of 15.7%, with continued pressure on free cash flow and a debt ratio of 66% [4] - For FY26, the company has guided a capital expenditure of 11 billion HKD, which is higher than previous guidance [4]
中金：维持玖龙纸业“跑赢行业”评级 目标价升至7港元