Glonghui, Feb. 17. According to a report published by Daiwa, Liwen Paper (2314.HK) issued a profit warning and expected a 60% year-on-year decline in earnings last year, mainly due to the year-on-year decline in revenue and gross margin. Although downstream demand is expected to gradually improve this year, the bank believes that the market has fully reflected the relevant potential rebound. Since the Group's stock price has recovered more than 40% from the low in November last year, the current valuation is equivalent to 7 times this year's price-earnings ratio, which is the average for the past five years. The bank said that it downgraded Liwen Paper's investment rating from “outperforming the market” to “holding”, lowered its target price from HK$3.5 to HK$3.3, and lowered its profit forecast for 2022 to 2024 by 17% to 30%, reflecting lower sales assumptions. The bank believes that the group may face several challenges this year, which may affect the recovery, including worsening supply and demand dynamics and competition from imported wrapping paper.