Beat-Up Chinese Paper Stocks May Be Poised To Rise

Beat-up shares in Chinese paper producers may be poised to rise in the second half of 2012, ?Northeastern Securities of Jilin said in a research report on Saturday.

Shares of leading suppliers such as Nine Dragons Paper, Lee & Man Paper, and Sun Paper? have tumbled in the past year on excess industry supplies and weak international demand, ?cutting into the fortunes of some of the region?s richest businesspeople.? (See related story here about Lee & Man).

Among the biggest losers, Shenzhen-traded Shandong Sun Paper sank to a three-year closing low of 5.03 yuan on Thursday, before edging up 0.01 yuan on Friday.? Sun?s chairman Li Hongxin ranked No. 157 on the 2011 Forbes China Rich List with wealth of $955 million yet today he?s worth only a little more than half that. (Click here for a link to the 2011 Forbes China Rich List.)

However, ?shares may be poised to rise, Northeastern Securities said. First-half?profit at another big industry supplier,? Shandong Chenming Paper, for instance, won?t be below 72 million yuan, or US$11 million, according to a projection by the company on July 12. Because actual first-quarter profit was 15 million yuan, that implies net income in the second quarter shouldn?t be any lower than 57 million yuan, almost quadruple the preceding three-month period. The company officially projected second-quarter net income would be in a range of 72-150 million yuan.

To be sure, that?s a big fall of 70-85% compared with a year ago.? But ?the light of dawn? may be on the horizon, Northeastern said.

Source: http://www.forbes.com/sites/hengshao/2012/07/29/beat-up-chinese-paper-stocks-may-be-poised-to-rise/

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