Gelonghui, Feb. 27 | Motong published a report. Last year was one of the worst years in the mainland wrapping paper industry. The main reason was that consumer demand slowed sharply under the widespread prevention and control of the epidemic across the mainland. It was pointed out that Liwen Paper (2314.HK) and Jiulong Paper (2689.HK) have both issued a warning. Looking ahead, the bank expects that as supply discipline continues to be strengthened, Nine Dragon Paper will shift its focus to profitability, and demand recovery should accelerate in April, which will drive paper profits to recover. According to the bank, although Liwen Paper and Nine Dragon Paper have outperformed the market since this year, their price-earnings ratio estimates are still close to historically low levels.

Motong lowered the profit forecasts of Nine Dragons Paper and Liwen Paper for the 2022-2025 fiscal year by 25-67% to reflect the outlook for FY2022 and updated paper profit margins. Motong lowered the target price of Nine Dragons Paper from HK$11.5 to HK$10 (equivalent to the consolidated 2024 and 2025 market account rates 0.8 times), and Liwen Paper's target price from HK$6.8 to HK$5.8 (equivalent to 0.6 times the consolidated market account rate for FY2024 and FY2025), all maintaining the “increase in holdings” rating.