[ET Net News Agency, 14 August 2019] HSBC Global Research lowered its target price for
Nexteer Automotive Group (01316) to HK$11.3 from HK$11.7 to factor in new cash flow
assumptions and maintained its "buy" rating.
The research house said Nexteer's 1H gross profit margin decreased to 15.8% from 18.1%
in 1H 2018. The margin was hurt as additional launch costs were incurred as GM transformed
its platform, and operating leverage went slightly negative when overall revenue
contracted.
Though the results came in quite weak, HSBC thinks this is largely due to non-operating
and one-off items such as FX headwinds and launch costs to cooperate with GM's platform
transformation. Management guided for a margin improvement in 2H driven by US driveline
restructuring initiatives. HSBC slightly adjusted its earnings forecasts by incorporating
the 1H financial numbers. (KL)
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01316 NEXTEER
Nominal 
3.940 +0.060 (+1.546%) Research Report
14/08/2019 16:40
{I-bank focus}HSBC trims Nexteer (01316) to HK$11.3; "buy"
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