Citigroup: Dazhu CNC (03200.HK) saw an acceleration in revenue growth in July, which is expected to eliminate negative market sentiments.

According to the Zhitong Finance APP, Citibank released a research report stating that Taiwan-based Largan Precision (03200.HK) is a major competitor of Dazhong CNC in the market for printed circuit board mechanical drilling equipment. In July, its revenue growth rate year-on-year accelerated further to 153%, marking the third consecutive month of revenue growth acceleration since May. Although there are recent market concerns about deteriorating cash flow among ultra-large customers potentially leading to a slowdown in demand for AI printed circuit board equipment, Citibank believes the reality is the opposite. It considers that demand for AI printed circuit board equipment is turning robust, and Largan Precision's revenue continues to accelerate, likely alleviating market negativity towards Dazhong CNC. Citibank also pointed out that the current price of Dazhong CNCs H-shares corresponds to an estimated price-to-earnings ratio of about 26 times for 2026, which represents a discount of about 65% compared to A-shares. The stock price has adjusted about 50% from its recent high. It has given a "Buy" rating with a target price of HKD 325, corresponding to an estimated price-to-earnings ratio of about 51 times for 2027, with a discount of about 25% compared to A-share valuations.