[ET Net News Agency, 15 August 2019] HSBC Global Research lowered its target price for
Yue Yuen Industrial (00551) to HK$22 from HK$24.6 and maintained its "hold" rating.
The research house said Yue Yuen's core net profit down 12% in 1H, excluding mainly
disposal gains. The manufacturing business, which was mainly affected by the capacity
migration, saw its operating profit margin (OPM) decline; the retail business, as
represented by Pou Sheng (03813), maintained its strong momentum.
Looking forward, HSBC expects the retail business to ride on the robust sportswear
consumption trend in China and maintain rapid revenue growth. This, together with the
efficiency gain, is likely to support rapid revenue growth and margin expansion.
HSBC reduced its profit forecasts by 25-26% in 2019-20 to reflect the lower OPM
forecasts. (KL)