According to the research report released by Bank of America Securities, it maintains a 'neutral' rating on Times Electric (03898), considering the second quarter performance. The company's profit forecasts from 2021 to 2026 have been raised by 6%, 8%, and 6% respectively, with a Hong Kong listed target price of HK$34, up from HK$31.7.

The report states that the company's second quarter net profit increased by 31% year-on-year, in line with the earlier preliminary performance announcement. Benefiting from the strong growth in railroad equipment, quarterly revenue increased by 16% year-on-year, surpassing the bank's expectation of 7%. The gross margin reached 32.8%, an increase of 2.5 percentage points year-on-year, and a decrease of 1.3 percentage points compared to the previous quarter, slightly lower than the bank's expectation of 33.3%.

The bank pointed out that the company's revenue from railroad equipment increased by 25%, reaching CNY 4 billion in the second quarter, while the growth rate of the emerging equipment business narrowed to 6%, mainly due to the slowdown in the growth of new energy vehicle driving systems and industrial converters. In addition, the management has observed that there will be short-term gross margin pressure in the semiconductor business during the second half of the year when the capacity of the IGBT factory in Yixing, which produces low voltage power semiconductor devices, increases.