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Vinda Reports Slowing Paper-Products Sales Growth in China

Vinda International Holdings Ltd. (3331), a Chinese maker of household paper products, said it has told analysts that the strength of its brand hasn’t been completely protected from slowing growth in the industry.

Sales growth of paper products in China in the first quarter of 2013 was weaker than in the same period last year, according to Vinda’s Hong Kong stock exchange filing yesterday, issued in response to an Apple Daily article June 4. While the company reported gross margin of more than 30 percent in 2012, it can’t provide “absolute assurance” it will repeat that performance this year.

“Without commenting on the particular percentage, the company would consider the current year growth to be weaker than that of the immediately preceding year,” Hong Kong-based Vinda said in its filing. Brand strength had helped “mitigate” the effects of the slowdown, it said.

Vinda’s statement comes after Daiwa Securities Group Inc. (8601) and Kim Eng Securities HK Ltd. cut their recommendations on the company this month, citing slower sales growth and a weaker outlook. The toilet-paper maker said yesterday it hadn’t provided any insider information to analysts. The stock was suspended from trading yesterday pending the statement, after dropping 15 percent since May 28. It resumes trading today.

The company said it plans to upgrade upgrade existing facilities and accelerate construction of new production capacity. Vinda said it has no plans to to cut its annual production capacity target of 1 million metric tons for 2015.

It’s “hard to foresee” wood-pulp prices, which rebounded this year, falling in time to help the company’s gross margin for 2013, Vinda said in yesterday’s filing. The company also makes paper towels, boxed facial tissues and paper napkins.

To contact the reporter on this story: Joshua Fellman in New York at jfellman@bloomberg.net

To contact the editor responsible for this story: Stephanie Wong at swong139@bloomberg.net

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