Lyon: Haier SmartHome's (06690) target price lowered to 25 Hong Kong dollars, performance in Chinese and American markets both weakening.

Lyon released a research report stating that considering the weakening demand in China and the United States, the net profit forecast for HAIER SMARTHOME (06690) for the next two years will be reduced by 25% and 21%. The target price for HAIER SMARTHOME (600690.SH) A shares has been lowered from 34 RMB to 28 RMB, while the target price for H shares has been reduced from 32 HKD to 25 HKD. The company still sees the high-end positioning of Haier positively, but believes that the company needs to overcome the downturn in the two countries' cycles in order to realize its value; maintaining an "outperform" rating. HAIER SMARTHOME's revenue in the fourth quarter of last year decreased by 7% year-on-year to 68 billion RMB, and net profit fell by 39% to 2.2 billion RMB, falling short of the bank's expectations. During the period, revenue in the Chinese market fell by 15% year-on-year, mainly due to the early release of demand in the previous few seasons due to the policy of replacing old with new; sales in the United States remained roughly flat, but due to a weak market, the company was unable to pass on cost increases (including tariffs) to consumers, leading to a significant decline in profit margins.