Haitian International downgraded to "Collection" and lowered its target price to HK $21.80. As China's economic data show that the recovery in downstream demand is still weak, we have adjusted the profit forecast of Haitian International (the "company"). We predict that the company's shareholder net profit in 2023 / 2024 / 2025 will increase by 12.9%, 10.6% and 9.3%, respectively, compared with the same period last year. We expect the company's earnings per share in 2023 / 2024 / 2025 to be 1.602 yuan, 1.772 yuan and 1.937 yuan respectively. Our target price corresponds to a price-to-earnings ratio of 12.0,10.8 and 9.9 times 2023-2025.
We lowered our forecast for the injection molding machine market. The downstream of injection molding machine business has a strong correlation with household appliances, automobile, packaging and other industries, and the downstream demand is obviously affected by macro-economy. Since 2023, China's economy has been in the process of gradual recovery, but the overall recovery is relatively weak. At present, the real estate industry is still in a weak state, which continues to affect residents' demand for household appliances and other consumer goods, thereby curbing the overall demand for injection molding machines. Therefore, we believe that the injection molding machine market is still in a weak recovery stage. But we believe that the company, as an industry leader, is likely to grow faster than the market average.
Demand in overseas markets remains resilient, and the company continues to expand overseas markets. It can be seen that overseas market demand remains resilient, better than we expected. In the context of the current devaluation of the RMB, the gross profit margin of the company's overseas products will be raised. We believe that the company's expansion of overseas markets can effectively balance the adverse effects of insufficient domestic demand. In the long run, the company's overseas production base will help the company to actively expand its overseas market share. The company's expansion in overseas markets will continue to achieve positive results.
Catalyst: recovery of downstream demand; decline of raw material prices; improvement of company capacity utilization.
Risk tips: downstream recovery may be weaker than expected; the company's overseas market expansion may be slower than expected.