CICC Cuts Nexteer Target Price 15.5% on Profit Disappointment

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·Mar 26 2026, 04:29

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Key Takeaways

CICC has significantly lowered its financial outlook for automotive supplier Nexteer following disappointing second-half 2025 results. The investment firm cut its target price and profit forecasts, citing asset impairments and tariff pressures that hurt the company's bottom line.

CICC slashed its 2026 net profit forecast for Nexteer by 32% to $153 million and lowered its stock target price by 15.5% to HKD7.1.
The revision follows a 16.3% year-over-year decline in Nexteer's second-half 2025 net profit, which fell short of market expectations despite a 7.6% increase in revenue.
Despite the cuts, CICC maintained its 'Outperform' rating, anticipating future growth from the mass production of Nexteer's steer-by-wire systems.

CICC Cuts 2026 Profit Forecast 32% to $153 Million

Reflecting a more cautious outlook on Nexteer's short-term profitability, CICC slashed its net profit forecast for the company for this year by 32% to $153 million. The investment firm also cut its target price for the stock (01316.HK) by 15.5% to HKD7.1. The revision was a direct response to Nexteer's recent earnings report, which failed to meet market expectations due to persistent external pressures.

2H 2025 Net Profit Falls 16.3% Despite Revenue Growth

Nexteer's performance in the second half of last year revealed a divergence between top-line growth and profitability. While revenue increased by a solid 7.6% year-over-year, net profit contracted by 16.3% over the same period. The company attributed the profit decline to the financial impact of asset impairments and tariffs, which overshadowed its sales momentum and signaled underlying margin pressure.

CICC Maintains 'Outperform' Rating on Steer-by-Wire Prospects

Despite the immediate headwinds and forecast reductions, CICC maintained its 'Outperform' rating on Nexteer. The firm's longer-term conviction is based on the anticipated benefits from the large-scale mass production of the company's steer-by-wire business and broader product intelligence initiatives. CICC introduced a net profit forecast of $205 million for 2027. The new HKD7.1 target price implies a forward P/E ratio of 15x for this year and 11x for the next, suggesting valuation upside if the company executes on its technological transition.