Key Takeaways
Morgan Stanley cut its price target for GEEKPLUS (02590.HK) to HKD 29 from HKD 37, citing higher spending on artificial intelligence and overseas expansion that will weigh on near-term profitability.
"The company's autonomous mobile robot (AMR) business is in a phase of rapid penetration, with revenue and order growth remaining solid," Morgan Stanley's research report said, while noting the trade-off for future growth. The investment bank maintained its "Overweight" rating on the stock.
The adjustment follows a revision of the broker's financial forecasts to account for GEEKPLUS's strategic investments.
Morgan Stanley lowered its gross margin forecasts for 2026 through 2028 to 36.3%, 37%, and 37.3%, respectively. The changes reflect an expected higher contribution from lower-margin regions like Latin America and Eastern Europe, as well as uncertainties in freight costs and the impact of ramping up new product capacity.
Consequently, net profit margin forecasts for 2026 to 2028 were also reduced to 1.6%, 5.8%, and 9.7%, respectively, as the firm increases its assumptions for R&D and selling expenses tied to its AI and overseas channel development.
The revision highlights a strategic pivot for GEEKPLUS, trading current margins for future market share in the high-growth robotics sector. Investors will be watching the company's next earnings release for early returns on its AI and international investments.
This article is for informational purposes only and does not constitute investment advice.
