Shares of Shenzhou International, a major garment processing plant supplying global sports and leisure brands, tumbled as much as nearly 10% in Hong Kong to hit HK$77.2 on Friday after several financial institutions cut target prices on the stock.
Shenzhen’s net profit after tax rose by 6.3% year over year in the first half to 2.367 billion yuan. BofA Securities said the growth was driven by foreign exchange gains and if excluding forex gains, the company’s core net profit after tax plunged by 20% year over year, meeting forecast.
The broker expects that it will take longer for Shenzhou International’s gross profit margin to recover to the pre-Covid level, given sub-optimal utilization and uncertainties from order book. The firm’s 2022-23 earnings-per-share estimates were trimmed by 2% and 8%, it said.
Shenzhen International’s stock price has fallen 43% year-to-date, against a 15% slide fro the benchmark Hang Seng Index and fully reflecting market concerns. Overall, the stock was restated at Buy with target price axed by 11% to $130, given a brisk risk-reward level, said BofA Securities.
Goldman Sachs lower its target price to HK$107 from HK$113. Dawai Securities lowered the target price by 9% to HK$96 and China International Capital Corporation (CICC) slashed target price by 23% to HK$107.22.
