[ET Net News Agency, 4 June 2020] HSBC Global Research lowered its target price for Lee
& Man Paper (LMP)(02314) to HK$5.6 from HK$6.1 and maintained its "buy" rating.
The research house said the local government of Dongguan, where a third of LMP's
capacity is located, announced a "Blue Sky Protection Plan" in mid-May. The plan is to
convert the city's industrial captive power plants from coal to gas to lower pollution by
the end of September.
HSBC lowered its earnings estimates for LMP by 8% for FY2020 and by 7% for FY2021
and FY2022, respectively, as marking to market the latest paper prices and raw material
costs. It expects downstream demand to be under-pressured in the near term due to the
global economic slowdown. HSBC expects the import ban led margin expansion story will now
be delayed to 2021 as demand normalizes. (KL)