Core Viewpoint - CICC has raised the net profit estimates for Nine Dragons Paper (02689) for FY26-27 by 10% and 12% to 4 billion and 4.5 billion HKD respectively, due to the gradual release of cost advantages from self-produced pulp [1] Group 1: Financial Performance - The company's 1HFY26 performance met prior forecasts, achieving a net profit of 2.21 billion HKD, with a net profit attributable to shareholders of 1.97 billion HKD, representing a year-on-year increase of 319% [2] - The net profit per ton improved significantly, primarily driven by increased production of self-produced pulp, with sales volume around 12.4 million tons (up 1 million tons year-on-year) and a net profit of approximately 160 HKD per ton (up 120 HKD per ton year-on-year) [3] Group 2: Capital Expenditure and Financial Health - The company has adjusted its capital expenditure slightly upwards to 12.5 billion HKD for FY26 (previously guided at 11 billion HKD), with remaining capital expenditure expected to be within 10 billion HKD, concluding by 27Q3 [4] - The asset-liability ratio has declined for the first time in five years to 64.7%, down 1 percentage point year-on-year; operating cash flow, capital expenditure, and free cash flow were 3.3 billion HKD (down year-on-year), 5.2 billion HKD, and -1.9 billion HKD respectively [4] Group 3: Market Outlook - The black paper segment is experiencing a stable recovery, with estimated net profit per ton around 100 HKD; the industry is expected to see stable demand growth and a bottoming out of the supply cycle in 2026 [5] - The self-produced pulp output and net profit per ton for white paper are anticipated to exceed expectations, with an estimated pulp production of over 2 million tons in 1HFY26, contributing significantly to the company's performance [6]
中金：维持玖龙纸业(02689)跑赢行业评级 上调目标价至12港币