Xiaomo published a report that lowered the investment rating of China Shipbuilding Defense (6.7, -0.03,-0.45%) (00317) H shares to “reduced holdings”, and lowered the target price by 2% to 5.9 yuan. It is believed that the valuation of its H shares is too high. Since mid-May, its performance has outperformed the MSCI China Index by 17 points, mainly due to market optimism about the restructuring of its parent company and China Shipbuilding Group.

The company's orders for the first half of the year fell 48% year over year, mainly due to market size and market share, and fewer orders than expected, while the bank had anticipated a 19% increase for the whole year earlier. Also, the company did not receive any orders in the third quarter. The company recorded a recurring loss of RMB 861 million in the first half of the year, almost as much as the bank had anticipated for the full year. Due to its low operating profit margin, it is expected that the company will continue to record recurring losses from 2019 to 2021.