[ET Net News Agency, 22 October 2020] Morgan Stanley raised its target price for
Nexteer Automotive Group (01316) to HK$9 from HK$4.6 and upgraded its rating to
"overweight" from "equal-weight".
The research house said the share price has fallen by 64% from its peak level in 2018
versus now, weighed by softer revenue, order shortfalls from the US market, and then the
Covid-19 outbreak.
Morgan thinks that the worst is behind us. Despite the stock uptick after 3Q results, it
is trading at 11x 2021 P/E, much lower than peers' 15-40x 2021 P/E, implying a cautious
stance on the sustainability of Nexteer's growth and long-term structural growth drivers.
Morgan revised up its estimates for Nexteer's 2020-22 earnings by 4-21% to reflect the
stronger sales resurgence and operating leverage. (KL)