UBS has issued a report stating that ND PAPER (02689) is facing increased cost pressures, influenced by tightening global energy markets and Indonesia's quota reductions. The firm has raised its price forecast for standard coal at the Qinhuangdao port to RMB 750, RMB 720, and RMB 670 per ton for the years 2026 to 2028, respectively. Overall, UBS anticipates that the energy price shock will lead to an average cost increase of approximately RMB 15 to 20 per ton. Consequently, UBS has lowered its profit forecasts for ND PAPER for fiscal years 2026 to 2028 by 11%, 2%, and 3%, respectively. The target price has been reduced from HK$11.00 to HK$10.80, while the "Buy" rating is maintained. Given that ND PAPER consumes about 0.26 tons of coal per ton of paper produced, coupled with potential additional increases in logistics costs due to oil price impacts, the rising energy prices are expected to pressure the company's profitability in the second half of fiscal year 2026 ending June 30. UBS noted that management plans to increase the proportion of imported wood chips from less than 1% to between 10% and 20% by the end of 2026. Management expects this move to enhance supply security and improve wood chip quality; however, imported wood chips are approximately RMB 200 per ton more expensive than existing domestic supplies. UBS projects that this shift could raise the company's average production costs by about RMB 5 to 10 per ton.