According to the report published by HSBC Research, negative factors of Man Wah Holdings (01999.HK) have been reflected in the stock price. Earlier estimates show that the improvement of the Mainland property market could promote the recovery of the local furniture market, but the observed property market data has not been reflected in the retail furniture industry, most likely due to weak consumer demand. In addition, earlier estimates did not take into account the factors of disrupted shipping that may affect the growth of orders from overseas sales. The bank has lowered its revenue forecast for the company for the fiscal years 2025 to 2027 by 11% to 15%.
The bank pointed out that the current price of Man Wah Holdings is at a historical low with a PE ratio of 8 for the 2025 fiscal year. It estimates a 7.9% compound annual net profit growth rate for the years 2024 to 2027 and a dividend yield of 6%-8% for the years 2025 to 2027. The bank considers its valuation to be low and maintains its 'buy' rating, but has lowered its target price from HKD8.7 to HKD5.6.