Jin Wu Financial News | The stock price of Nai Xue's Tea (02150) weakened in early trading and remained low in the afternoon. As of press release, it was reported at HK$2.49, down 4.6%, with a turnover of HK$5,017,700.
According to the news, HSBC Research said that Nai Xue's performance for the second half of 2023 fell far short of expectations, making the full year profit 91% lower than market expectations. Revenue increased by only 20.3% in 2023, lower than the forecast of 23.3% and lower than market expectations of 10.7%. Also, the report shows no dividends, and there is no indication that future dividends will be paid.
The bank lowered the company's revenue growth forecast for 2024 and 25 from 33.1% and 24.8% to 29.8% and 38.0%. In addition, net profit is estimated at RMB 83.8 million in 2024 and RMB 210 million in 2025, which is 75.1% and 62.7% lower than market expectations, respectively. The target price was reduced by 59.2% from HK$7.1 to HK$2.9, and the rating was downgraded from “buy” to “hold”.
The bank mentioned that as the business model changes, the tea market is crowded, and competitors may go public, weakening Nayue's previous advantage, because the bank believes that the company will focus on revenue growth rather than profitability, and profit visibility will decrease.