Citigroup has issued a research report following Lee & Man Paper (02314)'s positive profit alert, which indicated a significant surge of 64% to 71% in first-half net profit year-on-year. The broker noted that the interim results were stronger than anticipated.

Consequently, Citigroup has raised its profit forecasts for the years 2026 to 2028 by 22% to 28%. The firm's target price for the stock has been increased from HK$4.30 to HK$4.80, while its "Buy" rating is reaffirmed.

Citigroup anticipates a robust profit recovery of approximately 33% for Lee & Man Paper this year. Furthermore, it projects an average annual compound growth rate of 14% in profits from 2026 to 2028.

The report suggests that more paper manufacturers are expected to establish pulp facilities this year, moving towards a vertically integrated business model. This industry trend is seen as a slight positive for Lee & Man Paper, as it is believed to help enhance profitability.