Zhitong Finance and Economics learned that CICC issued a research report saying that it maintained the "outperform" rating of Nine Dragons Paper (02689), with FY24-25 earnings unchanged and a target price of 4HK$9. The company announced 1HFY24 results: revenue of 30.6 billion yuan, a year-on-year increase of -19%;Net profit turned from a loss to a profit of 29.2 billion yuan (in the center of the previous profit forecast), -13 in the same period last year8.9 billion yuan, in line with the bank's expectations.
According to the report, in 2023, the tariff on some imported paper in China will be zero, and according to the General Administration of Customs, the import volume of box tile paper will be 8.54 million tons, a year-on-year increase of +2.9 million tons; Under the concentration of weak domestic demand + new supply, import tariffs are zeroed to highlight the cost advantage of imported paper; Second, imported paper from Southeast Asia directly impacted the South China market, and it is not uncommon to see wars, and Dongguan in South China is the core factory area of Nine Dragons. Looking forward to 2024, the bank judged that the annual import of paper is still at a historical high, but the new impact is expected to weaken, and the rising cost of sea freight and foreign waste may further increase the cost of imported paper and cushion the impact on domestic paper prices.
The bank quoted the company's announcement that 3Q23YTD has put 800,000 tons of kraft + 550,000 tons of cultural paper + 200,000 tons of chemical pulp in Beihai, 300,000 tons of corrugated paper in Malaysia, and 100,000 tons of wood fiber in Vietnam, with a total paper + fiber production capacity of more than 25.8 million tons; The company announced that it intends to slow down the production capacity of 600,000 tons of chemical pulp + 1.1 million tons of chemical pulp in Beihai, and postpone it by one quarter to 3Q24; Originally scheduled to put 1.2 million tons of box tile paper in Hubei and changed to 600,000 tons of cultural paper (2Q25 delivery), this round of expansion is different from the previous cycle, Nine Dragons dynamically adjusted the pace and category of delivery, focusing on the diversification of product structure and the integration of the industrial chain. In addition, in 2021-23, the leading energy cost of the leading power plant with its own power plant is not superior, and the cost curve of the industry has been flattened.