Nine Dragons Paper (2689) H1 25/26 earnings summary

Executive summary

• Sales volume reached a record high for the third consecutive comparable period, up 8.3% year-over-year to 12.4 million tonnes, with revenue rising 11.2% to RMB37.22 billion and net profit surging 225.1% to RMB2.21 billion.

• Profit attributable to equity holders increased 318.8% year-over-year to RMB1.97 billion, driven by higher sales volume and improved average selling prices.

• Gross profit surged 67.4% to RMB5,347.2 million, with gross margin improving from 9.5% to 14.4%.

• Integrated pulp and paper production strategy, product mix optimization, and strategic expansion into high value-added paper grades enhanced competitiveness and risk resilience.

• Successful capacity ramp-up in key regions, including Beihai and Jingzhou, supported robust growth.

Financial highlights

• Revenue: RMB37,220.8 million, up 11.2% year-over-year.

• Gross profit: RMB5,347.2 million, up 67.4% year-over-year; gross margin at 14.4%.

• Operating profit: RMB3,407.6 million, up 113.4% year-over-year.

• Net profit: RMB2,211.7 million, up 225.1% year-over-year.

• EPS (basic and diluted): RMB0.42, up from RMB0.10 year-over-year.

Outlook and guidance

• Cautiously optimistic outlook, supported by favorable government policies, environmental trends, and completed integration of pulp and paper production.

• Focus on stringent cost control, lean management, increasing high value-added product ratio, and sustainable growth.

• Dividend distribution may resume when stable profitability and sufficient cash flows are achieved; no interim dividend declared for the period.