Citi: Lowers ND PAPER (02689) target price to HK$5.8, maintains "Neutral" rating.

Citi issued a research report stating that it has lowered its target price for ND PAPER (02689) from HK$8.8 to HK$5.8, reflecting weak potential profit margins, and maintains a "Neutral" rating due to relatively modest valuation. The bank noted that the target price cut is mainly due to expectations of continued weak consumption trends, as August retail sales growth fell short of expectations, and recent pre-sale property reforms will delay property sales until after completion; it is expected that China's pulp costs may decline for the remainder of the year due to increased industry supply, with companies pursuing vertical integration models like that of Nine Dragons. The bank also raised its earnings per share forecasts for fiscal year 2027 by about 5% and for fiscal year 2028 by about 2%, reflecting interest cost savings from the recent completion of perpetual bond redemption. Citi is more bullish on LEE & MAN PAPER (02314) within China's paper sector, as it expects falling pulp costs may bring upside to tissue paper profit margins.