Goldman Sachs raised its target price for Nine Dragons Paper (NDP)(02689) to HK$12 from HK$10.5 and maintained its "buy" rating.
The research house said NDP's FY2020 result was above Goldman's expectation, mainly due to higher sales volume and lower finance cost. It estimated NDP average interest rate declined to 3.1% mostly due to higher capitalized interest and lower total debt.
With the gradual ramp-up of recent newly added capacity at 2.05mnt in total, Goldman expects NDP total sales volume to grow by 4-7% per year for FY2021-23, higher than the containerboard industry output growth of 2-3% per year for 2021-22.
Goldman revised up its earnings estimates by +19%/+13% for FY2021/22, respectively to reflect higher unit profit and higher sales volume.
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