Leading paper manufacturer Nine Dragons Paper announced a positive earnings forecast. The Group expects net profit for FY2026 to reach approximately RMB3.9 billion to RMB4.1 billion, representing a year-on-year increase of 77% to 86%.
Profit attributable to equity holders is expected to reach RMB3.4 billion to RMB3.6 billion, up 92% to 104% year on year, effectively doubling from the previous year. The results mark the Company's entry into a new phase of steadily strengthening profitability.
Volume and Pricing Momentum Drives Significant Improvement in Earnings Quality
The strong earnings growth was driven by robust performance on both the volume and pricing fronts. On the one hand, shipment volumes across product lines continued to increase steadily, allowing economies of scale to be further realized. On the other hand, increases in finished paper prices significantly outpaced the rise in raw material costs, generating a clear margin expansion benefit. The widening spread between selling prices and input costs directly drove a meaningful recovery in the Company's overall gross margin and profit per tonne, resulting in a substantial improvement in earnings quality.
Full Redemption of US$400 Million Perpetual Securities Significantly Reduces Interest Burden
Alongside its strong earnings growth, the Company also achieved a major improvement in its financial position. On August 11, Nine Dragons Paper completed the cash repurchase and cancellation of all US$400 million of its senior perpetual capital securities, resulting in their delisting from the Singapore Exchange. The Company funded the replacement of these securities through a newly approved RMB2 billion three-year syndicated loan at an interest rate of 2.73%, together with its own funds. This refinancing is expected to reduce annual interest expenses by nearly RMB300 million, creating a sustainable contribution to future profitability. Notably, the controlling shareholder voluntarily surrendered a premium of approximately US$23 million by tendering the securities at the general repurchase price. This move demonstrates management's strong confidence in the Company's future development.
Integrated Pulp and Paper Operations Strengthen Competitive Moat as Cost Reduction and Efficiency Efforts Continue
As of the first half of FY2026, the Company had more than 5.4 million tonnes of annual in-house wood pulp production capacity in operation. A further 2.5 million tonnes of new capacity is expected to come on stream progressively between the end of 2026 and 2027, bringing total wood pulp capacity close to 8 million tonnes per year. The high proportion of internally produced pulp significantly reduces the Company's exposure to fluctuations in externally sourced pulp prices, creating a strong and sustainable cost advantage. In addition, the availability of in-house pulp has enabled the Company to continuously increase the proportion of higher-end paper products, further expanding its potential profit margins.
