The Zhitong Finance App learned that Morgan Stanley released a research report stating that it will downgrade the rating of Lanqi Technology (06809) from “increase in holdings” to “in sync with the market”, and that the target price was drastically lowered from HK$432 to HK$207. The bank is becoming more cautious about the cloud semiconductor industry, believing that the increase in profit forecasts of related companies seems to have peaked, and that the visibility of the Asian supply chain on general server production in 2027 and 2028 is declining.
Morgan Stanley pointed out that the bank's US team expects that about 20% of the new production capacity of US data centers in 2028 may be delayed until 2029, or affect the profits of cloud semiconductor suppliers in 2028. After the US midterm elections, project approval and launch may be delayed. Coupled with existing labor and material supply restrictions, the bank is concerned about the 2028 capital expenditure and construction cycle of hyperscale cloud service providers.
The bank believes that the risk within its coverage will rise in the next 2 to 4 quarters. While earnings growth should support it, further expansion of valuations is likely to be more difficult. Regarding Lanqi Technology, Morgan Stanley believes that procurement in the Chinese market may slow down, and there is a risk that valuations will be lowered. Although the structural value growth of products is still supported, the bank believes it is appropriate to reduce holdings before the growth rate slows down.