The Zhitong Finance App learned that J.P. Morgan Chase released a research report saying that Johnson Electric Holdings (00179) issued a profit warning for the first half of the fiscal year ending the end of September, and net profit for the expected period fell 56% to 62% year on year; the bank lowered the company's target price from HK$21 to HK$18, maintaining a “neutral” rating.
According to J.P. Morgan Chase, Johnson Electric Holdings' revenue for the first half of the fiscal year was generally stable. The expected net profit for the period was between 50 million and 58 million US dollars, down 16% to 27% on a half-year basis. The bank listed three key points: (1) exchange-related effects accounted for about two-thirds of the year-on-year profit decline, but continued pricing pressure and cost inflation also dragged down basic profitability; (2) solid oxide fuel cell (SOFC) growth has yet to offset the weakness of traditional business, and delays in the commissioning of Chinese automobile projects continue to limit the utilization rate of existing production capacity; (3) despite the bank's recent reduction in profit forecasts, the increase in new business contributions and operational efficiency measures provide an identifiable impetus for improving margins in the medium term.
The bank lowered Johnson Electric Holdings' net profit forecast for the 2027-29 fiscal year by 29%, 22% and 23% to $169 million, $247 million and US$309 million, which is 25%, 8% and 7% lower than market expectations. The bank predicts that gross margin will fall from 23% in FY2026 to 21.5% in FY2027, then to 22.5% and 23% in FY2028 and FY29, respectively, supported by improved utilization rates, economies of scale in new businesses, and expansion of manufacturing capacity.