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Nine Dragons shares tumble as pace of earnings growth slows

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Shares of Nine Dragons Paper (Holdings), the containerboard maker controlled by the mainland's second-richest woman, Cheung Yan, fell as much as 8.38 per cent yesterday after the company announced full-year earnings rose a slightly slower than expected 45.7 per cent.

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Net income for the year to June reached two billion yuan from 1.37 billion a year earlier. Sales rose 24.5 per cent to 9.84 billion yuan. Earnings per share were 47.94 fen against 40.72 fen a year earlier.

Earnings were lower than the 2.11 billion yuan mean estimate of a Thomson Financial poll of 14 brokers, or growth of 53.6 per cent.

'As a manufacturing business, Nine Dragons' earnings are already very impressive. Personally, I feel very satisfied with the result,' she said, adding that price movements by the shares were 'normal'.

Shares of Nine Dragons, which have surged 86.19 per cent this year, fell to as low as HK$24.05 yesterday after the release of the earnings announcement, before closing at HK$24.95, down 4.95 per cent.

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On February 13, the company's shares fell as much as 10.8 per cent despite announcing a 69 per cent jump in first-half net profit.

As the largest maker of container board, Nine Dragons was able to better bargain with customers, boosting gross profit margin 2.2 percentage points to 23.5 per cent. It was also helped by increased economies of scale.

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