Citigroup has issued a research report adjusting its outlook for ND PAPER (02689). The report cites unexpected price adjustments in waste paper costs and year-to-date pulp prices compared to the fourth quarter of 2025 as the basis for reducing the company's profit forecasts for fiscal years 2026, 2027, and 2028 by 9%, 12%, and 7%, respectively. These revisions reflect the high base effect in Q4 2025, attributed to anti-involution measures, while recent price adjustments are driven by the seasonal lull during the Lunar New Year period and weak consumer demand. The bank has also lowered its target price for the stock from HK$9.5 to HK$8.8.

Citigroup believes that ND PAPER's share price, which has risen approximately 50% since the start of the year, has likely fully priced in the strong performance expected in the first half of fiscal 2026. Consequently, the firm has downgraded its rating from "Buy" to "Neutral," citing limited upside potential. Additionally, Citigroup has initiated a 30-day negative catalyst watch, anticipating a decline in China's Old Corrugated Cardboard (OCC) costs during the second quarter's off-peak season. This is expected to lead to a 7% year-on-year decrease in net profit for the second half of fiscal 2026, with net profit per ton narrowing to RMB 101 from RMB 129 in the same period last year.