The Zhitong Finance App learned that Citi released a research report stating that it lowered the target price of Daikin Heavy Industries (01081) H shares by 21%, from HK$43 to HK$34, and maintained a “buy” rating.

Citi lowered the company's net profit forecast for 2026 to 2028 by 23% to 29%, mainly because single pile delivery was slower than expected, reflecting uncertain subsidy prospects and lower returns due to rising interest rates.

Although the company's third-quarter results fell short of expectations and were also disappointing, the bank indicated that the company's stock price had fallen 65% since the H-share listing in May, which probably reflected most of the risks. Meanwhile, the development of potential new offshore wind farm projects in Germany and the UK may allow the company to obtain new orders in 2027, which will help rebuild investor confidence on a 12-month basis.

According to the bank, the company's current price is equivalent to 10.3 times the predicted price-earnings ratio and 0.9 times the market-account ratio in 2027. The valuation is impressive, and the company's profit recovery is expected from 2027 to 2028.

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