Tencent Securities News (Beixiang) Liwen Paper changed from rise to decline in the afternoon. As of press release, Liwen Paper (2314.HK) fell 0.98% to HK$913, with a turnover of HK$126 million.

The company announced in the afternoon that for the year ended December 31, 2017, the Group achieved revenue of HK$25.837 billion, an increase of 40.86% over the previous year; gross profit of HK$7.513 billion, an increase of 84.11% over the previous year; annual net profit of HK$5.04 billion, up 76.07% year on year, net profit of about HK$913 per tonne; profit of HK$11,147 per share; and declared a final dividend of HK$0.2 per share.

The announcement said that, benefiting from the mainland government's active shutdown of backward production capacity and environmental protection policies introduced one after another, excess capacity in the industry has been reduced. Coupled with the recovery in demand in the paper industry, the supply and demand situation has improved quite a bit. Also, the price of paper has risen as energy, raw materials, and transportation costs have soared. The increase in overall sales revenue, combined with preferential VAT refund policies, led to an ideal increase in marginal profit.

Earlier, Daimo published a report stating that Liwen Paper (2314.HK) issued a successful profit. The company expects net profit for the year ending December 31, 2017 to increase by more than 75% year-on-year, and estimates over HK$501 billion or HK$1.11 per share, which is 28% higher than market expectations, but in line with the bank's forecast of HK$1.15 per share last year.

The bank reiterated its “increase holdings” rating for Liwen Paper, with a target price of HK$11.4. The bank predicts that the increase in industry costs will continue to benefit leading companies in the industry, including Liwen Paper; it is also said that the mainland tightened import recycling quotas this year, which is expected to continue to support corrugated box (OCC) prices and benefit Liwen Paper.