HSBC Global Investment Research trimmed its target price for SF Intra-City (09699.HK) to HKD 19.5 from HKD 21.4, citing concerns over slowing growth in on-demand delivery orders. The bank maintained its "Buy" rating on the stock.
In a report published on April 14, HSBC noted that the market's worries about profitability are overdone. The research house argued that while growth may be slowing, it will remain at a relatively high level, and easing cost pressures could lead to further margin expansion.
The target price reduction comes after SF Intra-City's shares have corrected by 18% since the beginning of February, significantly underperforming the Hang Seng Index's 5% decline over the same period. On the day of the report, the stock fell 5.671% to close at HKD 11.32. The new target price of HKD 19.5 implies a potential upside of over 72% from the current price.
HSBC's contrarian "Buy" rating suggests it sees value in the logistics company despite the recent negative market sentiment. The bank's thesis hinges on the company's ability to improve profitability even as top-line growth moderates.
The report presents a bullish view that counters the prevailing market narrative focused on growth deceleration. Investors will be closely watching the company's upcoming earnings to see if the expected margin expansion materializes. The stock's performance will likely depend on whether the company can deliver on profitability, validating HSBC's thesis over the market's growth fears.
This article is for informational purposes only and does not constitute investment advice.
