HK Stock Market Move | FOURTH PARADIGM (06682) rose more than 6%. Daiwa expects the company's order growth to be better than expected. It has raised its rating and target price.

FOURTH PARADIGM (06682) rose more than 6%, as of the time of writing, it rose by 6.03% to 51.85 Hong Kong dollars, with a turnover of 2.66 billion Hong Kong dollars. In terms of news, Daiwa released a research report stating that FOURTH PARADIGM has obtained a license to sell its artificial intelligence system Sage AI platform, allowing companies to use proprietary data to train their own models in private deployments. Daiwa expects the company's expected order growth from 2025 to 2026 to be better than expected, and points out that the drag from shareholder disposal rights has been removed. The stock rating for this stock has been upgraded from "underperform" to "buy", and its valuation basis has switched from price-to-sales ratio (PSR) to price-to-earnings ratio (PER). With an average target price-to-earnings ratio of 80 times for the next two years, the target price has been raised from 47 Hong Kong dollars to 58 Hong Kong dollars. The bank pointed out that the company's collaboration with Huawei to launch the SageOne IA machine, targeting large enterprises with data security concerns, could drive significant revenue growth. In 2024, FOURTH PARADIGM achieved a 13% increase in gross profit, and its revenue grew by 25% thanks to the continued growth of SageOne. In the first quarter of 2025, the company saw a 30% year-on-year increase in both revenue and gross profit. With strong demand for AI, Daiwa believes that the company's gross profit in 2025 will increase by 30% year-on-year, higher than the current market forecast of 25%. This will allow the company to achieve a break-even on the income statement in 2025, earlier than previously expected by Daiwa, which should also prompt a revaluation of the company.