Key Takeaways
HSBC Research cut its target price on SF Intra-city (09699.HK) by 8.9 percent to HKD 19.5, citing slower near-term growth but improving profitability.
"The broker believes market concerns over the impact of slowing growth in on-demand delivery orders on profitability are 'excessive'," HSBC Research said in a note.
The bank maintained its 'Buy' rating on the stock. The price target revision follows an 18 percent correction in the company's share price since early February, a steeper decline than the Hang Seng Index's 5 percent drop over the same period. In its revised forecasts, HSBC trimmed on-demand delivery order volume for 2024 and 2025 by 4 to 7 percent and cut total revenue forecasts by 5 to 7 percent.
Despite the revenue headwinds, HSBC raised its 2026 net profit forecast for SF Intra-city by 3 percent, citing lower unit operating cost forecasts. The stock closed down 5.8 percent on the news.
The conflicting forecast adjustments highlight a strategic shift for the company. Management has moved toward efficiency optimization after a period of rapid expansion of its rider team. HSBC noted that an "anti-involution" trend in the instant retail industry may also ease competitive intensity, providing a catalyst for further margin expansion.
The report suggests that while top-line growth is moderating due to regulatory factors, the company's underlying profitability is set to improve. Investors will be watching SF Intra-city's upcoming earnings release to see if margin expansion materializes as forecasted.
This article is for informational purposes only and does not constitute investment advice.
