Nine Dragons Paper (2689) H2 23/24 earnings summary

Executive summary

• Sales volume grew 18.3% year-over-year, driving a 4.9% increase in revenue to RMB59,496.4 million for FY2024.

• Gross profit surged 273.2% to RMB5,711.5 million, with gross margin up 6.9 percentage points to 9.6%.

• Net profit attributable to equity holders reached RMB750.7 million, reversing a prior year loss.

• Significant capacity expansions were completed, including new production at Beihai, Guangxi.

Financial highlights

• Revenue rose 4.9% year-over-year, mainly from higher sales volume despite an 11.4% drop in average selling price.

• Gross profit margin improved from 2.7% to 9.6% due to lower raw material costs.

• Operating profit was RMB2,645.1 million, compared to a loss of RMB1,595.2 million last year.

• Net finance costs increased 27.2% to RMB1,433.6 million, reflecting higher borrowings for expansion.

• Inventory rose 14.8% to RMB10,169.3 million; trade and bills receivables increased 90.2% to RMB8,482.3 million.

Outlook and guidance

• Management expects opportunities from policy support and consumption recovery, but notes risks from increased industry capacity, zero tariffs on imports, and global volatility.

• Focus remains on cost control, efficiency, technological innovation, and expanding high value-added products.