[ET Net News Agency, 14 August 2019] Morgan Stanley lowered its target price for
Nexteer Automotive Group (01316) to HK$8 from HK$9 and maintained its "equal-weight"
rating.
Despite reduced expectations, the research house said Nexteer's 1H results may still
have surprised the Street with a larger revenue shortfall in North America and greater
margin contraction, challenges that may linger in 2H.
Morgan said the longer-term structural thesis remains valid, backed by strong order
backlog, but it thinks the stock becomes more a 2020 play now.
Weaker sales in China and the US and likely higher launch costs of 21 new programs in 1H
put a 1.1ppt dent in EBITDA margin, to 15.1%. But management looks for HoH margin uptick
in 2H. (KL)