Core Viewpoint - Nine Dragons Paper (NDP) preannounced its 1HFY26 results, estimating attributable net profit between Rmb2.15bn and Rmb2.25bn, significantly exceeding expectations, with adjusted net profit potentially increasing 315–337% YoY to Rmb1.95–2.05bn [1] Group 1: Financial Performance - NDP's sales volume in 1HFY25 was approximately 12 million tonnes, with a per-tonne net profit around Rmb160, attributed to low costs and high output of self-produced pulp [1] - The firm’s pulp output in FY25 was 3 million tonnes, with 1HFY26 output exceeding 2 million tonnes, contributing to stronger-than-expected earnings [2] - NDP's average per-tonne profit of white paper exceeded Rmb300 in 1HFY26, indicating robust profitability [2] Group 2: Market Trends - Profit from linerboard and corrugated board is recovering steadily, with per-tonne net profit from this segment expected to reach around Rmb100 in 2H25 due to rising waste paper prices and seasonal demand [1] - The industry supply is expected to stabilize in 2026, with only Sun Paper's new capacity coming online, while demand is anticipated to grow steadily [1] Group 3: Future Outlook - NDP has three chemical pulp projects with a total capacity of 2 million tonnes scheduled to start operations in 4Q26–1Q27, which may enhance profitability in the traditional black paper market [3] - The firm guides capital expenditure of around Rmb11bn for FY26, lower than previous years, which is expected to improve financial statements as profit and cash flow recover [4] - Net profit forecasts for FY26 and FY27 have been raised by 32% and 39% to Rmb3.6bn and Rmb4bn, respectively, with the stock trading at 0.6x FY26e and 0.5x FY27e P/B [4]
NINE DRAGONS PAPER(02689.HK)：PREANNOUNCED 1HFY26 RESULTS BEAT EXPECTATIONS; PROFIT GROWTH OF SELF-PRODUCED PULP TO SUSTAIN