HK Stock Market Move | CHERVON (02285) up by over 10% again, turning losses to profits for the whole year by up to US$120 million. Net profit margins in the second half of the year significantly improved.

CHERVON (02285) rose by over 10%, reaching 10.43% as of press time, at 20.65 Hong Kong dollars, with a turnover of 254.324 million Hong Kong dollars. On the news front, CHERVON previously announced a profit release, expecting a net profit of approximately 110 to 120 million US dollars for the 2024 fiscal year, compared to a loss of 37.2 million US dollars in the previous year. The main benefits are the end of destocking cycle in channels, revenue growth of about 25-30%; driven by the recovery in scale, favorable factors such as raw material costs, the gross profit margin has improved; and the continuous improvement in operating efficiency. Caitong pointed out that the company expects a 25-30% increase in revenue for the full year, significantly exceeding the previously stated 20% target. Based on the full-year target, we estimate that the company's full-year revenue is expected to reach 1.72-1.79 billion US dollars, with H2 revenue expected to reach 0.90-0.97 billion US dollars, a growth rate of about 42-53%. According to the company's forecast, we calculate that the H2 net profit margin is expected to reach 5.0%-6.5%, excluding non-recurring factors related to the positioning adjustment of the company's German base, the net profit margin is expected to reach 7.5%-9.2%, significantly higher than the H1's 6.8%. The bank pointed out that the end of destocking cycle combined with interest rate cuts catalyzed, the company's performance entered an upward cycle.