Bank of America Securities: The target price of Era Electric (03898) was slightly lowered to HK$43, and the second quarter's results fell short of expectations

The Zhitong Finance App learned that Bank of America Securities released a research report stating that it reaffirmed the “neutral” rating of Times Electric (03898) and believed that the short-term profitability of its emerging equipment business was under pressure, but this was partly offset by long-term opportunities in the post-railway market and the increase in the market share of emerging equipment. After considering the results for the second quarter, the bank lowered its profit forecast for each year of 2026-28 by 5%, 4% and 3%, respectively, mainly due to an increase in operating expenses. The target price was reduced from HK$44 to HK$43 to reflect the revised profit forecast.

Times Electric's second-quarter revenue increased 4% year over year to 8 billion yuan (same below), lower than the bank's forecast of 5%. Gross margin was 32.5%, up 1.4 percentage points year on year, but fell 0.8 percentage points quarterly, higher than the bank's forecast of 31.3%. Net profit was 1.1 billion yuan, up 3% year on year, but lower than the bank's forecast of 1.2 billion 14%, mainly due to high R&D expenses and exchange losses.