Nine Dragons Paper dives 40% on lower profit rise

Nine Dragons Paper (Holdings) Ltd<2689>, Asia's biggest maker of containerboard, posted a lesser-than-expected growth of 11.4% in net profit from a year earlier.

The company on Monday published its earnings report for 2007 fiscal year. Net profit stood at RMB 1.06 billion, sharply below a growth of 70% achieved in the same period of 2006.

The growth slowdown comes as a result of an increased price of imported recycled paper which comprises the majority of production costs, the company said.

Spurred by the news, its H-shares dived 40% or HK$4.31 to a two-year low of HK$6.39 as it may suffer sell-off from institutional investors. Therefore, the wealth of Zhang Yin, president of Nine Dragons, also the second richest person in mainland China, experienced an overnight evaporation of HK$13.4 billion.