Lee & Man Paper Manufacturing (2314) H1 2024 earnings summary

Executive summary

• Revenue for the six months ended 30 June 2024 rose 2.4% year-over-year to HK$12.5 billion, with net profit surging 123.4% to HK$806 million and EPS at HK17.69 cents, up from HK7.15 cents last year.

• Profit growth was driven by improved demand, flexible raw material allocation, and successful integration of the industrial chain, both in and outside mainland China.

• Interim dividend declared at HK6.2 cents per share, up from HK2.5 cents last year.

Financial highlights

• Gross profit increased to HK$1,628 million from HK$980 million year-over-year.

• Operating profit before tax was HK$908 million, up from HK$438 million year-over-year.

• Net cash from operating activities dropped to HK$161 million from HK$1,700 million year-over-year.

• Total assets stood at HK$42.96 billion, with shareholders’ equity at HK$27.3 billion as of 30 June 2024.

• Net debt-to-equity ratio increased to 0.74 from 0.62 at year-end 2023.

Outlook and guidance

• Demand recovery is expected to continue in the second half of 2024, with steady economic recovery and increased consumption during shopping festivals and holidays.

• The Group will focus on cost control, optimizing production capacity, and expanding in Southeast Asia and Belt and Road markets.

• Packaging paper remains the core business, with favorable industry trends due to anti-plastic policies.

• Tissue paper demand is expected to rise, supported by new product launches and green initiatives.

• Industry expected to reach a turning point as supply and demand balance improves.