[ET Net News Agency, 5 February 2018] Citi Research cut its target price for Man Wah
Holdings (01999) to HK$8.7 from HK$8.8 on earnings cut, and maintained its "buy" rating.
The research house has recently visited Man Wah's operations in Huizhou, and talked to
senior management. It cut its FY2018/19 earnings forecasts by 7%/2%, given US competition
and faster-than-expected RMB appreciation.
Citi believes Man Wah has sustained high single-digit yoy sales growth in the US over
recent months. However, product ASP adjustment should happen slower than it expected,
given difficulty in price negotiations with OEM clients. Citi's recent checks with peer
Jason Furniture suggest limited product ASP raise as well.
Given 40%+/30%+ yoy price hikes for chemicals (for foam)/metal, Man Wah's US gross
margin pressure should linger, Citi added. (KL)