[ET Net News Agency, 19 August 2020] Daiwa Research raised its target price for Nexteer
Automotive Group (01316) to HK$5 from HK$3.9 and maintained its "hold" rating.
The research house said the significant decline in Nexteer's 1H net profit was due to
(1) revenue from North America (accounting for 66% of total revenue) declining by 38% on
production suspension; (2) gross margin eroding to 10% from 1H 2019's 16% on significant
downsized economies of scale; and (3) US$32m intangible asset impairments being recorded
as R&D expenses, mainly caused by program cancellations by some customers during 1H.
Daiwa expects recovery of revenue and margin from the historical lowest point in 1H. It
raised its 2020-21 EPS forecasts to US$0.079 from US$0.075. Daiwa forecast its 2020 net
profit to decline by 35%, but to grow by 60% for 2021. (KL)
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01316 NEXTEER
Nominal 
3.940 +0.060 (+1.546%) Research Report
19/08/2020 12:57
{I-bank focus}Daiwa raises Nexteer (01316) to HK$5; "hold"
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