Bank of America Securities: Downgrades NEXTEER (01316) target price to 8.2 Hong Kong dollars, net profit in the second half of last year falls short of expectations.

Bank of America Securities released a research report stating that NEXTEER (01316) saw a year-on-year revenue growth of 8% to $2.3 billion in the second half of last year, slightly higher than the bank's expectations. The gross profit margin in the second half was 11.3%, but operating expenses accounted for 8.5% of sales, higher than the bank's expected 7.7%, mainly due to a $24 million impairment loss related to the cancellation of the electric vehicle project. During the period, net profit fell by 16% year-on-year to $39 million, 47% lower than the bank's expectations. Taking into account NEXTEER's performance and latest outlook, the bank lowered its profit forecasts for 2026 and 2027 by 12% and 1%, respectively, and reduced the target price from HK$10 to HK$8.2, maintaining a "buy" rating. The bank believes in the company's prospects for improved profit margins, and considers new Steer-by-Wire (SbW) orders to be a catalyst for growth.