[ET Net News Agency, 11 September 2019] HSBC Qianhai Securities Research raised its
target price for Man Wah Holdings (01999) to HK$5 from HK$4.92 and maintained its "buy"
rating.
The research house said the company launched a new Cheers electric leisure sofa with an
integrated recliner feature earlier in 2019. With functions, such as an adjustable sofa
back and USB charging ports, this new product has been well-received among young consumers
(aged 20-35) and become the No.1 best seller in its category on JD.com.
Since FY2018, the company has gradually shifted its business focus to domestic sales.
HSBC expects domestic sales to grow markedly in FY2020, driven by the strong sales of the
new sofa. HSBC thinks there is growth potential in the domestic recliner market, given the
far lower penetration rate of recliners in China (13%) relative to the US (41%).
It raised its FY2020-22 net profit attributable to the parent company by 1.7%, 3%, and
3%, respectively. HSBC estimated FY2020-22 net profit will grow at a CAGR of 19%, much
higher than the post-IPO average net profit growth CAGR of 10%. (KL)