How does Mrs Cheung think? What does she believe in when it comes to building her business?
It is interesting to read how NPD gained its’ success through the waste or trash of the United States and Europe. I think this is right in line with how Mrs Cheung thinks; she wants to be ahead of all her competitors and gain every competitive advantage possible. By utilizing the paper waste of higher quality products in the US and Europe, she was able to bring this quality back to China where it was non-existent. As you can see in the reading as well, Mrs Cheung believes in rapid expansion to maximize revenue opportunity and that long term profits will come from taking on a lot of debt. But even as she said when speaking about the economic crisis: “Now the waves are so big, even some rocks are being washed away.” The economic crisis of 2008 did not only affect the small companies, but also the large and profitable ones like Nine Paper Dragons.
How would you summarize the company’s financial status? How does it reflect the business development goals and strategies employed by Mrs Cheung?
I would summarize the company’s financial status as struggling at the point this article was written. The company’s unsecured notes were rated as BBB- in April, 2008 and downgraded even lower to BB+ in October of 2008. On top of that, even though the company had a successful IPO in March of 2006, the debt accumulated after this IPO really hurt the company when the financial crisis hit in 2008. This demonstrates Mrs Cheung’s vision to take chances and be the market trend setter for her industry. It appeared though that she spread herself too thin through expansion and also through the large amount of debt she accumulated.
Is NDP in trouble? How would you answer differ if you were an existing shareholder, potential investor, or analyst?
Yes NDP is in trouble, In September 2007 NDP was at the peak of record share price HK$26.But in 2008 the share price of NDP started falling down and the company also announced they would delay of Rmb1.5 billion for the next 2009 fiscal year and they predicted the paperboard market would rebound but nothing great happen according to the market and they also said they would prepay $100 million of an existing $350 million. But according to the rating agencies the company market health is weak and being an existing shareholder, investor, or an analyst I would go with the rating agencies because they are expert in the share market and on the other hand the company itself issued profit warning, sales, profit forecast downward.
And since company has an $350 million loan out which company said they would prepay $100 million to the bank and still on the balance amount the interest would keep on increasing and it means the debt of the company is increasing and even many bank’s have stopped answering there calls. As said by morgan Stanley the company earnings growth is based on expansion plans if they don’t expand it will effect the company target and growth.
Courtney from Study Moose
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