Investment Rating - The report maintains a "Buy" rating for the company, with a target price of HKD 3.38 [4] Core Views - The company is in the final stage of its capacity expansion phase, with capital expenditures expected to slow down significantly by FY2026 [4] - The company's total designed capacity is projected to increase by 370 million tons to 25.37 million tons by FY2025, driven by expansions in Guangxi and Hubei [4] - The company's cost pressure is expected to ease due to the decline in overseas hardwood pulp prices, and paper prices are anticipated to stabilize and rise in the second half of the year [4] - The company's revenue is forecasted to grow by 9.1%, 6.9%, and 6.6% in FY2025, FY2026, and FY2027, respectively, with net profit expected to increase by 66.7%, 30.4%, and 24.6% over the same period [4] Financial Performance - FY2024 revenue increased by 4.9% YoY to RMB 59.5 billion, with net profit turning positive to RMB 751 million [5] - Sales volume for FY2024 grew by 18.3% YoY to 19.6 million tons, driven by strong performance in cardboard sales [5] - Average selling price in H2 FY2024 decreased by RMB 64/ton to RMB 2,997/ton, with mixed performance across product categories [5] - The company's fiber raw material capacity increased by 520,000 tons to 5.14 million tons, with further expansions expected in Guangxi and Hubei [5] - FY2024 operating cash flow was negative RMB 794 million, primarily due to a significant increase in bank acceptance bills [5] Financial Projections - Revenue is projected to reach RMB 64.9 billion, RMB 69.3 billion, and RMB 73.9 billion in FY2025, FY2026, and FY2027, respectively [6] - Net profit is expected to grow to RMB 1.26 billion, RMB 1.66 billion, and RMB 2.08 billion over the same period [6] - Gross margin is forecasted to improve from 9.6% in FY2024 to 10.6% by FY2027, with net margin increasing from 1.3% to 2.9% [6] - ROE is expected to rise from 1.5% in FY2024 to 4.0% by FY2027 [6] Balance Sheet and Cash Flow - Total assets are projected to grow from RMB 138.4 billion in FY2024 to RMB 166.7 billion by FY2027 [8] - Cash and cash equivalents are expected to increase from RMB 10.7 billion in FY2024 to RMB 20.6 billion by FY2027 [8] - Operating cash flow is forecasted to turn positive in FY2025, reaching RMB 9.35 billion, and continue to grow in subsequent years [11] - Capital expenditures are expected to decline significantly from FY2026 onwards, supporting debt repayment [4]
玖龙纸业：浆纸一体化优化成本，静待需求复苏