Macquarie: Maintain YUE YUEN IND (00551) "outperform" rating, target price raised to HK$20.9

Morgan Stanley released a research report stating that it raised the earnings per share forecasts for YUE YUEN IND (00551) for the fiscal years 2024 and 2025 by 18% and 17% respectively. It also raised its target price from 17.2 Hong Kong dollars to 20.9 Hong Kong dollars, maintaining an "outperform" rating. The report mentions that the company's management has raised the sales growth forecast for the fiscal year 2024 from a low double-digit year-on-year increase to 16%, expected to be driven by a capacity utilization rate exceeding 90%; however, the average selling price is expected to decline by a single-digit percentage year-on-year. YUE YUEN's management holds an optimistic view on the outlook for the first quarter of next year, mainly due to increased orders from many brands with expectations that orders from its main customers will stabilize in the fiscal year 2025. The bank predicts that the company's growth in the second quarter of next year will be driven by capacity expansion in Indonesia, and estimates that its manufacturing operating profit margin for the fiscal year 2025 will be 7%, primarily due to continued cost control partially offsetting the negative impact of new capacity growth.