[ET Net News Agency, 16 August 2018] J.P. Morgan lowered its target price for Lee & Man
Paper Manufacturing (LMP)(02314) to HK$12 from HK$14, and maintained its "overweight"
rating.
China has announced duties of 25% on old corrugated cardboard (OCC) imported from USA as
part of a group of counter-tariffs on recent US import tariffs imposed on goods from
China. The research house said 50 to 60% of OCC used by the company is imported OCC and of
that 40% to 50% would come from the US.
Assuming 25% of OCC came from the US, the impact of a 25% tariff would have a maximum
impact of 6.3% on the total cost of OCC and about 3.5% on the total cost of production
(2.5% as a percentage of sales so also 2.5% impact to GPM). JPM lowered its FY2019 EPS
forecast by 7.4% to reflect these changes. (KL)