UBS: Downgrades SITC (01308) rating to "Neutral" with target price reduced to 26.5 Hong Kong dollars.
The forecast predicts that the profit in the second half of the year will decrease year-on-year, mainly based on the high base of last year, believing that the current stock price already fully reflects the company's higher return premium compared to its peers.
UBS released a research report stating that SITC (01308) saw a 35% increase in its stock price during the year due to strong freight rates in Asia and healthy growth in container shipping volume. Recently, the stock reached a new high after Shanghai Jinjiang Shipping (Group) Co., Ltd. (601083.SH) and TS LINES (02510) announced their preliminary first-half performance. However, the bank forecasts a year-on-year decline in profits in the second half of the year, mainly due to the high base set last year. The bank believes that the current stock price already fully reflects the company's premium return over its peers, so it downgraded its rating from "buy" to "neutral." UBS lowered its earnings per share forecast for SITC for 2025 to 2027 by 6%/8%/9% respectively to reflect its cautious view on freight volume and rates in the second half of the year, with a target price lowered from 28 Hong Kong dollars to 26.5 Hong Kong dollars.
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