Bank of America Securities: The cartonboard market has returned to a balanced state, raising the target price of ND PAPER (02689) and LEE & MAN PAPER (02314). Improved demand supports profit recovery.

Bank of America Securities released a research report stating that since the end of April, the inventory of corrugated cardboard paper and boxboard paper has been gradually decreasing. The latest sampling shows that the inventory of corrugated cardboard paper manufacturers is 268,000 tons, and the inventory of boxboard paper is 691,000 tons, significantly lower than the peak of 393,000 tons and 960,000 tons in mid-April. This trend has brought the boxboard paper market back to a balanced state, and the bank predicts that paper prices will continue to rise in the short term, mainly due to coordinated price increases by large paper mills, low inventory levels of small paper mills, robust downstream stocking, and the continuous high cost of waste paper. Coupled with the gradual improvement in demand in the second half of the year, the bank believes that the profit margin of the paper industry is expected to further increase. Considering the above factors, the bank slightly raised the profit forecast for ND PAPER (02689) for the fiscal years 2027/28 by 4% and 1%, and raised the target price from HK$8.2 to HK$8.4 by 2%. Bank of America also raised the profit forecast for LEE & MAN PAPER (02314) for the fiscal years 2026 to 2028 by 10%, 6%, and 7%, respectively, and raised the target price from HK$3.2 to HK$3.8.