HSBC Global Research lowered its target price for Haier Electronics (01169) to HK$20.4 from HK$22.8 and upgraded its rating to "hold" from "reduce".
The research house said the share price has corrected 25% from March high. It now trades at a more reasonable valuation PE of 11x recurring 2019 EPS versus the last three-year average 1-year forward PE of 12.2x (range of 8.8-16.2x).
HSBC said the Carsate segment grew revenue by 4% in 1Q, better than the drop of 4% seen in 4Q 2018, but still below the full-year mid to high single-digit growth target. For the
Carsate brand, revenue for washers and water heaters were up by 15% in 1Q, much slower than the respective growth of 50% and 73% in 2018. With low visibility of a sequential recovery, HSBC now cut its FY2019 revenue growth for the manufacturing and distribution businesses to 5% and 3%, respectively, from 7% and 5% before.
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