J.P. Morgan lifted its target price for Nine Dragons Paper (NDP)(02689) to HK$10.5 from HK$9 and maintained its "overweight" rating.
Despite the impact of COVID-19 lockdown, the research house said NDP'a FY2020 sales volume and NP/ton were both slightly better than last year. The company will have no new capacity ramp up in 2021.
JPM believes China's packaging paper margins have troughed and will improve sequentially going forward. It raised its FY2021/22 net profit forecasts by 16%/15% to Rmb4.9bn and Rmb5.6bn, respectively, based on higher net dollar margins assumptions.
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