[ET Net News Agency, 14 August 2019] J.P. Morgan chopped its target price for Lee & Man
Paper Manufacturing (L&M)(02314) to HK$4.5 from HK$10 and downgraded its rating to
"neutral" from "overweight" as its pessimistic outlook for profitability has been only
partly reflected in current depressed valuation.
The research house believes the margin contraction trend in the packaging paper industry
is not over yet. At current levels, new capacity still has a strong incentive to ramp up
quickly. On the other hand, demand may remain sluggish due to trade tensions.
JPM expects L&M's net profit/ton to continue to decline in 2H 2019 and 2020. It cut its
FY2019/20 earnings forecasts by 34%/39% on a lower net profit/ton assumption. (KL)