On Friday, HSBC (LON:HSBA) adjusted its price target for CIMC Enric Holdings Ltd. (3899:HK) (OTC: CIMEF), reducing it to HK$8.70 from the previous HK$9.10. Despite this change, the firm continues to recommend a Buy rating for the stock.
The revision follows the company's investor meeting held on April 11, where CIMC Enric offered a detailed outlook on its expected earnings for 2024.
The company's earnings forecast is bolstered by a robust order backlog for offshore LNG vessels, which stands at 4.3 times the revenue generated in this category for 2023. This backlog is anticipated to support profit margins within the 'clean energy segment' and facilitate the company's expansion. Additionally, while hydrogen equipment sales projections have been reduced to RMB1.0-1.2 billion from RMB1.5 billion, this still represents a significant year-over-year growth of 43% to 71% for 2024.
HSBC's decision to lower the price target is attributed to more conservative estimates for the chemical equipment sector.
However, the bank maintains a positive outlook on CIMC Enric's stock, citing its attractive price-earnings growth (PEG) ratio of 0.7x, which is below the three-year average of 1.0x. The expected earnings per share (EPS) compound annual growth rate (CAGR) is also strong, projected at 18% over the period from 2024 to 2026.
The bank's stance on CIMC Enric is influenced by the belief that the company's expansion is not just a temporary trend but a structural shift. This confidence in the company's growth trajectory underpins HSBC's continued Buy rating, even as the price target has been adjusted.
InvestingPro Insights
As CIMC Enric Holdings Ltd. (3899:HK) (OTC: CIMEF) navigates through its growth trajectory, investors may find additional context through InvestingPro's real-time data and expert insights. According to InvestingPro, CIMC Enric pays a significant dividend to shareholders, which could be an attractive feature for income-focused investors. This is reinforced by the company's impressive track record of maintaining dividend payments for 24 consecutive years, signaling a strong commitment to returning value to shareholders.
InvestingPro data also highlights CIMC Enric as a prominent player in the Oil, Gas & Consumable Fuels industry, which may provide a competitive edge as the company expands its 'clean energy segment'. Furthermore, the company has shown a strong return over the last three months, potentially indicating a favorable market response to its strategic initiatives and financial performance.
Interested investors should note that while CIMC Enric's short-term obligations exceed its liquid assets, this has not deterred analysts' positive projections. InvestingPro Tips suggest that analysts predict the company will be profitable this year, which aligns with the positive outlook presented by HSBC. For those who wish to delve deeper into the company's financials and future prospects, InvestingPro offers additional insights. There are 6 more InvestingPro Tips available for CIMC Enric, which can be found at: https://www.investing.com/pro/0386. To access these insights and more, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.