20/08/2019 16:37

{I-bank focus}Goldman cuts Lee & Man Paper (02314) to HK$4.3

[ET Net News Agency, 20 August 2019] Goldman Sachs lowered its target price for Lee &
Man Paper Manufacturing (LMP)(02314) to HK$4.3 from HK$7 and maintained its "neutral"
The research house revised down earnings for LMP by 14%-57% for 2019-21, to reflect its
lower unit GP assumption for containerboard. Goldman believes the industry-wide spread
correction is mostly done with small to medium-sized players mostly at breakeven point at
spot prices, while it expects large players like LMP will continue to suffer unit profit
decline - Goldman estimated the unit raw material cost will increase by HK$86/t in 2020
and HK$118/t in 2021.
With demand weakness, it believes LMP will find it hard to pass through the cost
increase to downstream customers. Hence, Goldman expects unit GP to decline to HK$261/t in
2020 and HK$181/t in 2021, from HK$502/t in 2019. (KL)

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