玖龙纸业(02689) 　　Two rounds of price hikes in one month―strong evidence of pricing powerAccording to our channel checks, Nine Dragons Paper (NDP) announced price hikes again for its production bases including Tianjin, Shenyang and Chongqing, by Rmb100- 150/tonne for most products, effective by 15-16 November. Management expects price hikes for other production bases including Dongguan, Quanzhou and Taicang to follow within this week, by around Rmb100/tonne on average for most products. Two rounds of price hikes within a month (please refer to our note for the last price hike effectiveon 1 November, NDR takeaways: another round of price hikes announced) reaffirms our view that the industry's supply/demand improvement is structural, which is enhancing the pricing power of leading paper producers like NDP. Further consecutive price hikes could convince more investors of NDP's improving pricing power. 　　Consecutive price hikes (this round, in addition to the previous two rounds―approximately Rmb50/tonne each in late September and late October) reflected NDP's stronger pricing power, which we think is more important than the short-term price/cost fluctuations. Supply discipline should be sustained, especially in the core markets (coastal regions), and demand growth should be stable, which indicates sustainable pricing power. 　　On top of structural improvements in the sector, NDP has also put in effort to enhance its profitability internally. Management guided for 13.5m tonnes of production volume for FY17, up 0.4m YoY purely from capacity optimisation. This would lead to better margins given operating leverage. With strong cash flow and disciplined capex, management has guided for a significant drop in its gross debt (Rmb26bn by June 2017F, down from Rmb33bn by June 2016). This could save around Rmb200m in interest costs YoY, even with debt restructuring to cut its FX exposure. 　　Trading at 8x PE and 0.9x P/BV in FY17E, with 14% core EPS growth and 12% ROE in FY17E, we think NDP's valuation is compelling―thus, we maintain our Key Call Buy and three-stage DCF-derived price target of HK$9.56 (WACC: 8.4%). We think consecutive price hikes, rising dividends and a potential ease in raw material costs(waste paper and coal) following the peak season could help NDP re-rate.