According to the J.P. Morgan Chase report, Dechang (00179.HK)'s interim results fell slightly short of expectations, mainly due to the significant impact of the devaluation of the RMB and the slump in market demand for industrial motors, which lowered the 2016-17 earnings test by 15%/8%. Accordingly, the target price was lowered from 38 yuan to 34 yuan, maintaining the “increase in holdings” rating.

The bank believes the company will maintain European sales profits by hedging and improving efficiency. Sales performance of industrial motors in Asia was poor, but mainly because customers bought cheaper products. Market demand for high-end automotive motors and components continues to be strong. I believe that the recent acquisition of Stteco International can also help the Group grow.