- DHC announced Q1 2023 results that are weaker than we expected. Q1 2023 revenue declined 10% QoQ, but NPAT edged up 5% QoQ. These results remain weak YoY and achieve 22% and 19% of our respective full-year revenue and NPAT forecasts. We see potential downside risk to our forecasts, pending a fuller review.

- Although sales volume edged up QoQ, revenue retreated as selling prices weakened. Amid weak manufacturing and consumption, domestic carton paper prices continued to slump despite a temporary rebound in March. Meanwhile, export prices returned to the late 2022 level after a 10% recovery in 2M 2023 because Chinese demand was weaker than expected.

- DHC expects sales volume will remain resilient in 2023 at 340,000 tonnes (+5% YoY) andthe company will continue to operate at more than 100% of its paper factory’s capacity.