Nine Dragons Paper (2689) H1 24/25 earnings summary

Executive summary

• Sales volume reached a record 11.4 million tonnes, up 14.0% year-over-year, driving a 9.3% increase in revenue to RMB33,465 million.

• Net profit after tax surged by 124.9% year-over-year to RMB680.3 million, with gross profit up 18.1% and gross margin improving from 8.8% to 9.5%.

• Capacity expansion projects in Beihai, Guangxi commenced production, further expanding market coverage.

• Profit attributable to equity holders increased 60.6% to RMB469.6 million, and basic EPS rose 66.7% to RMB0.10.

• The group continued to optimize production, inventory, and resource utilization.

Financial highlights

• Revenue: RMB33,464.6 million, up 9.3% year-over-year, mainly from packaging paper (90.9% of revenue).

• Gross profit: RMB3,194.3 million, up 18.1% year-over-year; gross margin at 9.5%.

• Operating profit: RMB1,596.9 million, up 28.4% year-over-year.

• Net finance costs: RMB771.7 million, up 27.8% year-over-year due to higher borrowings.

• Cash and cash equivalents at period end: RMB11,889.6 million.

Outlook and guidance

• Focus on maximizing profit by controlling production costs, optimizing procurement, and expanding high value-added product share.

• Ongoing investments in new pulp and paper capacity in Guangxi and Hubei to further enhance product mix and competitiveness.

• Continued use of big data for management innovation and risk control.

• The group expects opportunities from government consumption stimulus and environmental trends favoring paper over plastic.

• No interim dividend declared for the period.