The Zhitong Finance App learned that Citibank released a research report stating that CIMC Enric (03899)'s profit forecasts for the 2026 and 2027 fiscal years were lowered by 21% and 14% respectively to reflect foreign exchange losses in the first half of the year and the one-time restructuring cost of the liquid food business of about 60 million yuan. The target price was reduced by 24% from HK$12.5 to HK$9.5, corresponding to the projected price-earnings ratio of 14 times in 2026 (previously 15 times), which is at its 15-year long-term average price-earnings ratio. However, the bank maintains a “buy” rating and believes that stock valuations are attractive. The current price is equivalent to about 11.4 times the predicted price-earnings ratio in 2026, which is about 20% lower than the long-term average price-earnings ratio.
Citigroup said that CIMC Enric's performance in the first half of the year fell short of expectations. Net profit fell 8% year over year, but new orders during the period increased 28% year over year, reflecting a positive business outlook. The bank expects the company's profit growth to improve from the second half of this year, supported by strong orders. After six consecutive quarters of year-on-year decline in the company's chemical business revenue, it regained 16% growth in the first half of the year, and new orders surged 54% year-on-year, reflecting that the worst period for the chemical business has passed. Revenue from the clean energy business increased 8% year-on-year in the first half of the year, slightly lower than expected, but gross margin was driven by high-margin key equipment business, which increased 1.1 percentage points year over year to 13.8%, and management expected gross margin to continue to expand.