Lee & Man Paper Manufacturing (2314) H2 2023 earnings summary

Executive summary

• Revenue for 2023 was HK$24.94 billion, down 14.5% year-over-year; net profit was HK$1.15 billion, a 12.4% decrease from 2022.

• Earnings per share were HK24.39 cents, compared to HK27.46 cents in 2022.

• Final dividend proposed at HK6.1 cents per share, up from HK3.3 cents last year.

• Sales volume reached 6.54 million tons, with net profit per ton at HK$176.

• Second half performance improved significantly due to market recovery and new pulp capacity.

Financial highlights

• Gross profit for 2023 was HK$2.5 billion, with a gross margin of 10%.

• Operating profit before tax was HK$1.41 billion; income tax expense was HK$258 million.

• Total assets at year-end were HK$54.1 billion; net assets were HK$28.77 billion.

• Bank borrowings increased to HK$19.29 billion; net debt-to-equity ratio rose to 0.62.

• Finance costs rose to HK$831 million, mainly due to higher borrowings and interest rates.

Outlook and guidance

• Packaging paper remains the core business, with demand expected to recover as China’s economy improves.

• Expansion in Southeast Asia continues, leveraging new production lines in Malaysia and Vietnam.

• Tissue paper business to focus on high-quality, eco-friendly products, with annual capacity at 1.1 million tons.

• The Group aims to further integrate upstream pulp production to secure raw materials and control costs.