Citigroup: Downgrades ND Paper (02689) rating to "Neutral" with target price reduced to HK$8.8

Citibank released a research report stating that based on the recent increase in waste paper costs and the unexpected price adjustments in pulp prices from the beginning of the year to now in the fourth quarter of 2025, they are lowering ND PAPER (02689) profit forecasts for the fiscal years 2026, 2027, and 2028 by 9%, 12%, and 7% respectively. This reflects that the high base in the fourth quarter of 2025 was due to anti-indulgence measures, while the recent price adjustments were caused by the Lunar New Year off-season and weak consumption. The bank also lowered the target price from the previous 9.5 Hong Kong dollars to 8.8 Hong Kong dollars. The bank believes that ND PAPER's stock price has already risen by about 50% since the beginning of the year, fully reflecting the impressive performance in the first half of the 2026 fiscal year. Therefore, the bank downgraded its rating from "buy" to "neutral," believing that the upside potential is limited. Citibank also initiated a 30-day negative catalytic observation, based on expectations that Chinese (old corrugated cardboard) OCC costs will decline in the second quarter off-season, with a projected 7% year-on-year decline in net profit in the second half of the 2026 fiscal year, narrowing net profit per ton from 129 RMB in the same period last year to 101 RMB.