Citi Research lowered its target price for Vinda International Holdings (03331) to HK$26.5 from HK$35 and maintained its "buy" rating.
The research house said Vinda's 48% operating profit growth to HK$545m in 3Q came 18% below Citi's expectation, with both sales and margin trend lower than expected. Topline declined by 0.2% in 3Q, due to management's relatively conservative strategy amid intensified price competition, which led to market share loss.
Citi expects pulp price to stay at the current low in 4Q and expects core OPM (operating profit margin) in 4Q to be 13.4% (+0.5ppt). It lowered its 2020/21/22 core EPS forecasts by 3%/8%/17%, to reflect 2%/6%/10% lower revenue and lower OPM assumptions.
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