Shares of Lee & Man Paper (02314) opened sharply higher, gaining more than 8%. At the time of writing, the stock is up 8.5% to HK$3.70, with a turnover of HK$1.12 million.

The significant move follows the company's announcement regarding its expected performance for the six months ending June 30, 2026. The paper manufacturer anticipates recording a profit attributable to the company in the range of approximately HK$1.33 billion to HK$1.39 billion. This represents a substantial increase of 64% to 71% compared to the HK$811 million profit reported for the same period last year.

The company attributed the projected strong profit growth primarily to an improvement in the group's profit margins. Analysis from securities firms has previously noted that the waste paper-to-containerboard and corrugated paper industry chain, after enduring a prolonged period of low prices for over three years, witnessed an unexpected price surge in the second quarter. Market attention is now focused on whether this upward price trend can be sustained into the peak season in the second half of the year.

For companies operating at the cyclical trough of profitability, such price increases are seen as potentially offering significant room for profit recovery and margin expansion.