[ET Net News Agency, 16 September 2019] Citi Research citing Saigon Times noted that a
consortium of Lee & Man Paper Manufacturing (02314) and Japan's Hokuetsu Group has
proposed developing a complex with a deepwater seaport, a logistics center and a paper
mill (tissue paper) worth US$3bn in north-central coastal province of Ha Tinh, Vietnam.
The tissue paper mill will have an annual capacity of 1 million tons, compared with
current 795k t capacity.
The research house thinks the management is studying the feasibility and unlikely to be
materialized soon because of the mega investment budget.
Citi believes this can address the possibility of China banning the import of solid OCC
(old corrugated cardboard) from 2020 at earliest. And that proposed investment seems not a
top agenda to the perspective of upcoming China policy change of import OCC.
Citi expects the net dollar margin of containerboard has bounced a bit during 3Q
compared with average HK$600/t in 1H, thanks to seasonal demand and the inventory
re-stocking among the downstream customers.
It maintained its "neutral" rating on Lee & Man Paper, with a target price of HK$4.3.
(KL)