According to a report published by Bank of America Merrill Lynch, the profit forecast of Baisheng Group (03368.HK) for this year and next year was lowered by 78% and 41%, and the target price was lowered from 1.21 to 1 yuan, maintaining the “outperform the market” rating.

Baisheng Group recorded a loss of 100 million yuan in September (same below), and lost nearly 77 million yuan in the third quarter. Excluding one-time provisions, recurring net profit after tax fell 85% in September. The bank should go ahead. Although the company's valuation is not expensive, it believes that the company is being dragged down by the weak macro environment, adverse factors in the industry and the company's own problems. The catalyst is limited in the short term, profits will continue to be pressured, and its transformation plan will take time to have a positive impact.

The report mentioned that Baisheng's resolution to acquire 67.6% of Parkson Retail Asia (PRA) shares was recently rejected by shareholders. The bank believes that the acquisition may help the company increase profits in the short term and attract attention, but at the same time, considering ASEAN's challenging macroeconomic prospects, currency depreciation, and PRA's weak performance in recent years, the bank's view on suspending the transaction is neutral.