[ET Net News Agency, 22 July 2019] Daiwa Research lowered its target price for China
Railway Signal & Communication (CRSC)(03969) to HK$6.2 from HK$6.4 and maintained its
"hold" rating.
The research house believes CRSC's slower-than-expected net profit growth in 1Q was
attributable to the slower implementation of urban transit projects and the deteriorated
blended gross margin due to a change in sales mix. However, new orders for 1Q remained
robust, with railway and urban transit new orders up 23% and 14%.
Meanwhile, CRSC offered 1.8bn A Shares (Shanghai: 688009) at an offer price of CNY5.85
per share on the China STAR Board today.
Daiwa trimmed its 2019-21 EPS forecasts by 10-16% to factor in the slightly
worse-than-expected 1H prelim results, lower gross margin assumptions, and the 9% EPS
dilution from the A-Share offering in 2019 and 17% in 2020. (KL)