Nine Dragons Paper, the largest maker of containerboard on the mainland, is determined to keep its liabilities in 2009 at the 2008 level, if not lower.

"We will cut down the current liabilities," Chairperson Cheung Yan said yesterday after the company's annual general meeting. She also said that the central bank's lending and deposit rate cuts will help the manufacturing industry.

"The interest rate cuts will help the entire market as well as the manufacturing industry on the mainland," she said, adding Nine Dragons' business prospects will remain satisfactory.

The current gearing ratio of Nine Dragons Paper amounted to 94 percent, while its net liability reached 12.7 billion yuan by the end of June.

She also expects the growth of domestic consumption on the mainland to remain reasonably strong, thanks to the central government's 4-trillion-yuan stimulus package.

"The growth of domestic consumption on the mainland may even perform better than that of the export industry," Cheung said.

Since the prices of raw materials have been tumbling quite fast recently, Cheung said the company's product prices will also follow the drop.

"Our company's orders and sales are running quite good so far," Cheung added.

Mirroring the surge in the benchmark Hang Seng Index, shares of Nine Dragons Paper jumped 3.23 percent, or HK$0.04, to HK$1.28 yesterday.

CASH Asset Management Associate Director Patrick Yiu said the interest rate cuts will benefit Nine Dragons Paper, as the company's gearing ratio is quite high. Since there is a certain demand for the paper industry on the mainland, it can support the company's business growth.

"However, investors may not buy the shares of high-liability companies, because of the underlying investment risk," Yiu added.

(HK Edition 11/28/2008 page2)