About a year ago KGI Asia maintained an accumulate recommendation on Hung Hing Paper, a holding company whose subsidiaries manufacture paper and corrugated cartons, and print and trade paper. KGI expected Hung Hing's turnover to stabilise towards the end of 2002 and possibly improve in the first quarter of this year. An increase in sales from the mainland following China's entry to the World Trade Organisation was expected to boost the group's earnings in 2003. However, KGI expected Hung Hing's annual net profit to decline 7 per cent to HK$254 million for the year 2001-2002 and turnover to decrease by 9 per cent to $1.64 billion, largely because of cautious consumer sentiment following the September 11 terrorist attacks. Its paper and carton printing and manufacturing businesses were expected to suffer. It forecast earnings per share of 44 cents and for Hung Hing to pay a dividend of 26 cents per share. Last July Hung Hing reported a year-on-year decrease in net profit to $257 million for the year to March 31, 2002. Turnover fell 10 per cent to $1.62 billion while earnings per share dropped from 48.8 cents to 44.8 cents. A final dividend of 19 cents brought the total dividend to 28.5 cents, the same as the previous year. Hung Hing said that production had increased, with 13 per cent more paper used. Paper prices had hit bottom and the company believed the worst business conditions had passed. It had completed the relocation of its production facilities from Hong Kong to Shenzhen during the year, and expected to produce more than 200,000 tonnes of paper in the year ahead, compared with 180,000 tonnes in the previous year. In December last year Hung Hing said interim net profit had risen 7.21 per cent to $166.59 million, boosted by sales growth. Turnover for the six months to September 30 last year rose 6.04 per cent year on year to $1.02 billion. An interim dividend of 9.5 cents would be paid, the same as a year ago. The counter closed at $5.45 on Friday.