New Alert: Lee & Man Paper (2314 HK) announced profit warning for 1HFY22
What’s new
- Lee & Man Paper’s net profit is expected to drop 59% to HK$768m in 1HFY22 due to a decrease in profit margin
- The decrease in profit margin is due to the lower demand in industry low season with higher raw material cost during the period.

Our view
- This is surprising given LMP’s tissue operation is considered relatively stable business than those manufacturers with only containerboard business.
- We expect the demand in paper market continues to be low but the worst is likely over in this 1H.
- We expect the peak season starting in Sep-Oct will help LMP to hike ASP where margins should recover in 2H.
- We recommend BUY and both recommendation and TP are currently under review.