[ET Net News Agency, 4 July 2018] Morgan Stanley trimmed its target price for Lee & Man
Paper Manufacturing (02314) to HK$11.1 from HK$11.4, and retained its "overweight" rating.
The research house made mark-to-market changes to its paper ASP assumptions and lowered
its price forecasts by 1% each year, 2018-20, resulting in 4% lower net profit/t margin
for 2018-20.
Incorporating a weaker CNY versus USD exchange rate, Morgan reduced its EPS estimates by
4% in each year, 2018-20. It said the company has the second-largest paper packaging
production capacity in China and had 9% of the Chinese market in 2016. The recent capacity
cuts announced in Guangdong have led to a better supply-side outlook.
It also has better margins than Nine Dragons Paper (02689) thanks to its healthier
balance sheet. (KL)