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Investing.com - Citi upgraded Nine Dragons Paper (Holdings) Limited (HK:2689) from Neutral to Buy and raised its price target to HK$6.20 from HK$3.60, citing pulp cost savings from new internal production facilities.
The upgrade comes ahead of Nine Dragons Paper’s expected 2HFY25 results in September, with Citi projecting core attributable profit to shareholders would surge 58% year-over-year to Rmb811 million while revenue remains flat at Rmb28.782 billion.
Citi expects the company to announce a positive profit alert in August, approximately one month before the official results release, and has opened a 30-day positive Catalyst Watch on the stock.
The investment bank raised its FY25-27 earnings estimates by 36-58%, attributing the improved outlook to cost savings from the commencement of internal pulp production at mills in Beihai and Hubei.
Citi noted that Nine Dragons Paper’s valuation remains "cheap" at approximately 0.4x price-to-book and 7x price-to-earnings for FY26E, with an estimated total return potential exceeding 55%.
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