Nine Dragons Paper net profit doubles but stock plunges 30% on missed high expectations
Nine Dragons Paper reported a 102.6% surge in net profit to 3.581 billion yuan for the fiscal year ending June 30, 2026, with revenue up 18.6% to 75 billion yuan. Despite the strong results, the stock fell 16.8% on the profit alert day and declined nearly 30% from its August high. Analysts at UBS attributed the sell-off to an "expectation gap," as some investors had anticipated net profit of 39-41 billion yuan. Citi maintained a neutral rating with an HK$8.8 target, noting margin pressure ahead.
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Nine Dragons Paper Annual Results: Revenue Hits 75 Billion Yuan, Net Profit Surges 83.8%
Nine Dragons Paper (02689) released its annual results for the year ending June 30, 2026, showing strong operational improvements. The group reported sales volume of approximately 24.5 million tonnes, up 14.0% from 21.5 million tonnes in the prior year, driven mainly by a 2.6 million tonne increase in Chinese business sales. Revenue reached approximately 75 billion yuan, an 18.6% year-on-year increase. Profitability improved significantly: gross profit rose 50.8% to about 10.925 billion yuan, net profit increased 83.8% to about 4.047 billion yuan, and profit attributable to equity holders surged 102.6% to 3.581 billion yuan, doubling from the previous year. Basic earnings per share were 0.76 yuan, up about 100%. The company proposed a final dividend of 10.0 fen per share, equivalent to approximately 11.6 HK cents.
Read sourceNine Dragons Paper's Profit Surge Fails to Lift Stock; Market Awaits Peak Season Catalyst
Nine Dragons Paper (02689) reported a 102.6% year-on-year increase in net profit to 35.81 billion yuan for the fiscal year ending June 30, 2026, with revenue up 18.6% to 750 billion yuan. Despite this strong earnings improvement, the company's stock price fell nearly 30% from a mid-August high, including a 16.8% drop on the day of its profit alert. According to a UBS report, the market's negative reaction was attributed to investor expectations being set higher than the actual results, with some anticipating a net profit of 39-41 billion yuan. The article notes that the stock's current price-to-earnings ratio has fallen below 7 times, a historically low level. Looking ahead, the company's six major bases have issued price increase notices for corrugated paper and kraft linerboard, effective October, as the traditional peak season approaches. Analysts cited in the article suggest that if the price hikes are successfully implemented and cost savings from the company's pulp-and-paper integration strategy materialize, Nine Dragons Paper could see a valuation recovery. The article presents this as a key point of market focus, balancing the positive earnings trend against short-term capital outflows and market skepticism.
Nine Dragons Paper's Profit Surge Fails to Lift Stock; Market Awaits Peak Season Catalyst
Nine Dragons Paper (02689) reported a 102.6% surge in net profit to 35.81 billion yuan for its fiscal year ending June 30, 2026, on revenue of 750 billion yuan, up 18.6%. Despite the strong earnings beat, the stock fell 16.8% on the day of the announcement and has since declined nearly 30% from its August high. Analysts at UBS attribute the sell-off to a 'expectation gap,' where some investors had anticipated even higher profits of 39-41 billion yuan. The company is now entering the traditional peak season for paper demand, with its six major bases issuing price hike notices for corrugated and kraft paper of 50 yuan per ton, effective October. The article from Zhitong Finance suggests that while short-term capital has exited, the company's fundamentals are improving, driven by volume and price increases, higher gross margins, and a pulp-paper integration strategy. The key question is whether the upcoming peak season price hikes can be successfully implemented and support a valuation recovery for the stock, which currently trades at a low historical P/E ratio of under 7 times.
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Citi Maintains Neutral Rating on Nine Dragons Paper, Target HK$8.8; Sees H1 FY2027 Margin Pressure
Citi has released a research report maintaining a 'neutral' rating on Nine Dragons Paper (02689) with a target price of HK$8.8. The bank will review its forecasts after the company's performance briefing on September 24. Nine Dragons Paper's fiscal year results for the period ending June 30 largely met expectations, with net profit attributable to shareholders rising 102.6% year-on-year to RMB 3.581 billion, about 2% above the midpoint of its August profit alert of RMB 3.5 billion. Revenue increased 18.6% to RMB 75 billion, sales volume rose 14% to 24.5 million tons, and average selling prices increased 4% year-on-year. Citi noted that the company recorded property, plant and equipment impairment of RMB 277 million and exchange losses of RMB 184 million, suggesting underlying net profit was closer to RMB 4 billion. However, net profit per ton in the second half of the fiscal year fell 13% year-on-year to RMB 174, marking the first contraction after three consecutive interim periods of stable margins, reflecting weak consumption and the near-completion of margin recovery from vertical integration of pulp. Citi expects margins in the first half of the fiscal year ending December 31 to decline further on a half-year basis, as waste paper cost inflation appears to be outpacing paper price inflation in the first quarter ending September.
Read sourceCiti Maintains Neutral Rating on Nine Dragons Paper with HK$8.8 Target
On September 24, Citigroup released a research report on Nine Dragons Paper's fiscal year results ending June 30. The company's net profit attributable to shareholders was 3.581 billion yuan, up 102.6% year-on-year, roughly in line with expectations and 2% above the midpoint of its August profit alert of 3.5 billion yuan. Revenue rose 18.6% to 75 billion yuan, with sales volume up 14% to 24.5 million tons and average selling price up 4%. However, net profit per ton in the second half of the fiscal year fell 13% year-on-year to 174 yuan, marking the first contraction after three consecutive interim periods of flat margins, reflecting weak consumption and the near-completion of margin recovery from vertical integration of pulp. Citi expects margins to decline further sequentially in the first half of the fiscal year ending December 31, as waste paper cost inflation appears to be outpacing paper price inflation in the first quarter ending September. The bank maintains a 'neutral' rating and a target price of HK$8.8, and will review its forecasts after the company's performance briefing on September 24.
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