Jinwu Financial News | The research report released by morgan stanley pointed out that lk tech (00558) did not meet expectations for the first quarter of the 2025 fiscal year, mainly due to the decline in the machinery business. The report mentioned that lk tech's revenue for the first quarter of the 2025 fiscal year was 2.6 billion HKD, a year-on-year decrease of 6% and a quarter-on-quarter decrease of 16%, lower than the expectations of morgan stanley and market consensus. Among them, the revenue from the machinery business decreased by 19% year-on-year, while PIMM and CNC center businesses grew by 30% and 14% year-on-year respectively. The gross margin reached 29%, an increase of 3 percentage points year-on-year and an increase of 1 percentage point quarter-on-quarter, exceeding the expected 27%. The net income was 0.148 billion HKD, a year-on-year decrease of 28% and a quarter-on-quarter decrease of 47%, also lower than expected.

The report analysis believes that the revenue of lk tech did not meet expectations mainly due to the deterioration of the machinery business, while net income was affected by rising R&D costs (which increased by 206% year-on-year) and an increase in the allowance for accounts receivable. The report also pointed out that lk tech's free cash flow was negative 0.1668 billion HKD, a year-on-year decrease of 195% and a quarter-on-quarter decrease of 52%, with a dividend payout ratio of 28% for the first quarter of the 2025 fiscal year, down 2 percentage points year-on-year. morgan stanley believes that the decline in lk tech's performance weakens its investment thesis and has given it a "market perform" rating with a target price of 3.90 HKD.