Deutsche Bank: Lowering the target price of Johnson Electric Holdings (00179) to HK$40. Geopolitics and rising costs are expected to drag down gross profit margins

The Zhitong Finance App learned that Deutsche Bank released a research report saying that the data for the first fiscal quarter ended at the end of June 2026 was in line with market expectations. Quarterly turnover increased 2% year over year to US$936 million. The sales volume of automotive products in the Asia-Pacific region increased 4% year on year during the period. Deutsche Bank believes it was mainly driven by mass production of Chinese car manufacturer projects and increased market share. The target price was lowered from HK$46 to HK$40, maintaining the “buy” rating.

Deutsche Bank quoted management as saying that gross margin for the 2026-2027 fiscal year may face multiple challenges. Freight charges will rise due to geopolitical tension. Coupled with rising plastic resin costs, global light vehicle production is expected to drop 3% year on year, and raw material costs such as copper, silver, aluminum, steel and electronic components will rise widely. Taking into account the latest performance and guidelines, Deutsche Bank raised Johnson Electric's turnover by 3% to US$3.8 billion for the 2026-2027 fiscal year, which is expected to increase 5% year over year, while the gross margin forecast was lowered by 0.9 percentage points to 23.4%, which is expected to remain roughly the same as year on year.