报告名称：Nine Dragons Paper Holdings(02689.HK)Time to bottom fish
报告类型：港股研究
报告日期：2016-01-22
研究机构：中金公司
股票名称：玖龙纸业
股票代码：02689
页数：9
简介：Action
We recommend buying NDP now given its: 1) strong corenet dollar margin of Rmb197/t (stripping FX losses) in 1HFY16which greatly beat consensus of Rmb150~160/t. Sales volume of6.7mt in 1HFY16 was also 3% ahead of guidance (big coreearnings beat); and 2) active debt replacements (RMB debts toreach 80% by end-1Q16) to greatly lower FX risk (the biggestconcern removed). Its P/B has now hit a historical low at 0.57(attractive valuation) amid market turmoil and investors’worries about its FX issue and is worth re-rating. NDP bookednon-recurring FX losses of Rmb1.01bn in 1HFY16.
Reasoning
Industry supply cuts, lower OCC costs and VAT refundwill continue to favor NDP’s margin spread, in our view,although weak demand may limit ASP upside. Product ASP isrising mildly into 2016 while OCC costs remain friendly.
Active debt replacements will substantially reduce NDP’sFX risk. NDP’s renminbi debts are expected to reach 80% by theend of 1Q16 while the effective interest rate will slide furtherfrom 4.3% in FY15 thanks to lowered benchmark rate in China.Also, it aims to further cut debts by Rmb5.0bn in FY16.
Both opex ratio and effective tax rate will likely declinefrom the high levels in 2HFY15 as NDP is completing its grouprestructuring.
Strong OCF (>Rmb5.5bn) and less capex (

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