HALISTER1: Nomura Sees 13% Downside in Inovance Tech on Margins, Expenses

Nomura Sees 13% Downside in Inovance Tech on Margins, Expenses

(Bloomberg) -- Nomura cuts Shenzhen Inovance Technology to reduce from neutral and revises down its FY17-FY19 EPS forecasts by 13% each, given its lower estimates for gross margin and higher assumptions for administrative expenses, analyst Patrick Xu writes in note Wednesday.
  • Lowers PT to 26.63 yuan from 28.01 yuan
    • Revised PT implies 13% downside from Wednesday’s close
  • Shenzhen Inovance Technology’s dependence on insulated-gate bipolar transistors makes it hard for co. to differentiate its products and results in weak bargaining power against both its customers and suppliers
  • Nomura expects administrative expenses to increase to 18% of revenue in FY17-FY19 from 16% in FY16, as management spends 1b yuan on R&D for electric passenger vehicles
  • NOTE: Stock has 23 buys, 4 holds and 1 sell, with average PT of 30.04 yuan
To contact the reporter on this story: Emma Dai in Hong Kong at edai8@bloomberg.net To contact the editors responsible for this story: Richard Frost at rfrost4@bloomberg.net Ron Harui, Robin Ganguly

Alert: HALISTER1
Source: BFW (Bloomberg First Word)

Tickers
300124 CH (Shenzhen Inovance Technology Co Ltd)

People
Patrick Xu (Nomura Holdings Inc)

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