Citibank: Jiulong Paper's (02689) target price to HK$5.8 maintains a “neutral” rating

The Zhitong Finance App learned that Citibank released a research report stating that it lowered the target price of Nine Dragons Paper (02689) from HK$8.8 to HK$5.8, reflecting weak potential profit margins and maintaining a “neutral” rating because the valuation was relatively low.

The bank pointed out that the target price reduction is mainly due to the continued weakening of the expected consumption trend, as retail sales growth in August fell short of expectations, and the recent pre-sale property reform delayed property sales until completion; it is expected that the cost of pulp in China may fall for the rest of the year. Due to increased industry supply, the company is pursuing a vertical integration model like the Nine Dragons.

The bank also raised its earnings forecast per share for FY2027 by about 5% and FY2028 by about 2%, reflecting the savings in interest costs by completing the recent perpetual bond redemption response. Citigroup is more optimistic about Liwen Paper (02314) in the Chinese papermaking sector because it is expected that pulp costs will fall or bring room for improvement in toilet paper profit margins.