Bank of America Securities has issued a research report noting that Lee & Man Paper (02314) saw a 69% year-on-year increase in net profit after tax for the first half of the year, driven by a recovery in profit margins for its containerboard and tissue business segments, along with a 12% rise in sales volume. Management revealed that the company was able to continue raising prices in the traditionally quiet second quarter for the containerboard market, indicating a gradual recovery from the overcapacity issues of recent years.

With the peak season approaching in the second half of the year, Bank of America Securities expects further margin improvements. Due to the brighter profit outlook, the bank has raised its earnings forecasts for 2026, 2027, and 2028 by 23%, 11%, and 7%, respectively, lifting the target price from HK$3.8 to HK$4.5 while maintaining a "Buy" rating. Lee & Man Paper is investing RMB 6 billion in its Guangxi Guigang project, which plans to build 750,000 tonnes of pulp capacity and 300,000 tonnes of tissue capacity, with production expected to commence in August 2027.

Bank of America Securities believes that once the project is operational, the group's total capacity will increase to 1.7 million tonnes of pulp and 1.5 million tonnes of tissue, making it the second-largest vertically integrated pulp and tissue producer in China. This expansion is expected to support future growth in the pulp and tissue business.