[ET Net News Agency, 19 July 2019] Morgan Stanley lowered its target price for Nexteer
Automotive Group (01316) to HK$9 from HK$10.3 and maintained its "equal-weight" rating.
The research house still believes Nexteer can stay top-ranked in the auto-steering
market with a market share in the long run, but transitional pain may linger in the next
6-12 months.
Nexteer's 1H results may stay subdued, Morgan model a net income of US$160mn, down 20%,
as a result of anemic sales in US market and underperformance of its downstream clients in
China market. It noted that the company also has tough 1H 2018 comps.
For US operation, Morgan anticipates Nexteer to face the challenge from accelerated
order reshuffle amid platform migration by its major US customer, albeit likely
transitional.
For China, SAIC GM's production volume declined 14% YoY in 1H and SAIC GM Wuling's
production dropped 43% YoY, which will undermine Nexteer's top-line growth. (KL)