[ET Net News Agency, 30 August 2019] HSBC Global Research lowered its target price for
CIMC Enric Holdings (03899) to HK$6.9 from HK$9.9 and maintained its "buy" rating.
The research house said CIMC's 1H net income was up 24%, but GPM contracted by 30bp to
15.3%, due to weaker margins in the energy equipment and liquid food segments. Management
targets double-digit revenue and gross profit growth. HSBC sees the potential for 2H
margin improvement as some EPC (Engineering Procurement Construction) projects complete
and actual costs are reassessed.
HSBC expects operating cash flow to turn positive by 2019 as some WIP (work-in-process)
projects complete in 2H. It trimmed its net income estimates by 2% for each year of 2019,
2020 and 2021 after adjusting for the revenue and margin trends in the actual earnings for
1H. (KL)