On Friday, HSBC (LON:HSBA) downgraded Feng Tay Enterprises, listed on the Taiwan Stock Exchange under the ticker 9910:TT, from a Buy to a Hold rating. The firm also reduced the price target for Feng Tay from NT$220.00 to NT$150.00. The adjustment comes in response to revised earnings per share (EPS) estimates for the years 2024 and 2025, which have been decreased by 24.6% and 22.1%, respectively.
The downgrade is attributed to anticipated lower sales and margins following a subdued order forecast from Feng Tay's primary client, Nike (NYSE:NKE). The firm's analysts have adjusted their valuation outlook by shifting the base year from 2024 to 2025. This change is a reflection of the slower-than-expected growth momentum for Feng Tay.
In addition to the change in the base year for valuation, HSBC has applied a reduced price-to-earnings (PE) multiple of 19.0x, a decrease from the earlier 24.6x multiple. This new PE ratio is based on the lowered 2025 EPS projection of NT$7.92, which has been cut down from the previous estimate of NT$10.16.
The revised price target of NT$150.00 represents a roughly 5% downside from the previous target, indicating a more cautious outlook for the stock. The downgrade to a Hold rating suggests that HSBC advises investors to maintain their current positions in Feng Tay without increasing their holdings.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.