Nine Dragons Paper: Asia Pacific: FY26 post-result key takeaways

Morgan Stanley's FY26 post-result key takeaways on Nine Dragons Paper (2689.HK). De-leveraging will be ND's main focus over the next few years amid fewer capex requirements. Packaging paper capacity expansion in domestic China will take a pause, while current expansion is mainly focused on pulp and fibre capacities. Management guided total capex to be Rmb11bn for FY27 (ending in June), declining to Rmb6bn in FY28, leaving more funds for repaying debt. Management expects ND's net debt ratio to decline from 67% in FY26 to ~50% in FY27, with a long-term target of lowering the total debt ratio to ~30%. Increasing self-sufficiency in pulp capacity enhances packaging paper profits;