Citigroup Trims CHINA LESSO Target Price to HK$6.20, Citing Margin Concerns from Oil Price Surge

Stock News04-02 14:42

Citigroup has released a research report following an investor meeting with the management of CHINA LESSO (02128). The group's 2025 performance fell short of expectations, and with the recent surge in oil prices, the bank has adopted a more cautious stance on its gross margin outlook. Consequently, Citigroup has lowered its profit forecasts for 2026 and 2027 by 30% and reduced the target price from HK$7.00 to HK$6.20, while maintaining a "Buy" rating. However, the bank expressed a preference for companies offering higher yields or possessing stronger profit growth prospects within China's infrastructure sector, such as Zoomlion (01157) over Hangcha Group (603298.SH) and China State Construction International (03311). The report noted that despite the recent oil price spike driven by conflict between the US and Iran, CHINA LESSO's management anticipates that gross margin in the first quarter of 2026 will remain consistent with the second half of 2025, supported by raw material restocking. Demand momentum had already been recovering in the three months preceding the conflict (from October last year to January this year), with the overseas channel business expected to be the primary growth driver.

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Comments

We need your insight to fill this gap
Leave a comment