Key Takeaways:
HSBC Global Investment Research trimmed its price target for SF Intra-City (09699.HK) by 8.9 percent to HKD19.5, even as the bank reiterated a “Buy” rating on the on-demand delivery provider.
The revision comes as the company’s shares have corrected by 18 percent since early February, a steeper fall than the Hang Seng Index’s 5 percent downswing over the same period.
In a research report, HSBC said it believed market concerns over the impact of slowing growth in on-demand delivery orders on profitability are overdone. The bank expects growth to remain at a relatively high level, while easing cost pressures could become a catalyst for further margin expansion.
Shares in SF Intra-City closed down 5.671 percent on Tuesday. The stock has been under pressure, with short-selling volume reaching $571.57K, representing a ratio of 2.265 percent. The target price cut, despite the maintained Buy rating, may create conflicting signals for investors, contributing to volatility. While the price cut could fuel short-term bearish sentiment, the underlying positive profitability outlook might attract value investors.
The new HKD19.5 target price implies a significant upside from the current price. Investors will be watching the company's next earnings report for signs of margin expansion and a stabilization in order growth.
This article is for informational purposes only and does not constitute investment advice.
