Damo: The target price of Shengquan Feng Holdings (02285) reaches HK$22.5, rating “in sync with the market”

The Zhitong Finance App learned that Morgan Stanley released a research report stating that it raised the target price of Quanfeng Holdings (02285) from HK$20 to HK$22.5 to maintain a “in sync with the market” rating, which mainly reflects an improvement in profit margin prospects driven by a marked recovery in gross margin in the first half of 2026.

The bank updated the company's performance and financial forecast for the first half of 2026, rolled the valuation to the earnings forecast per share for the second half of 2026 to the first half of 2027, and raised the earnings forecast per share by 8% to 14% from 2026 to 2028. The new target price remains 12 times the target price-earnings ratio, but the valuation benchmark has been rolled to the profit forecast for the above period.

The bank believes that diversification of the company's brand portfolio and channel expansion are beneficial to long-term market share and profit growth, but the recovery of the DIY division is still uncertain. Coupled with the recent rebound in stock prices from a low level, the current valuation is reasonable. The bank expects revenue to grow at a CAGR of 7% and profit at a CAGR of 12% from 2026 to 2028.