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Morgan Stanley released a research report stating that Huachen China (01114) issued a profit warning, reflecting pressure on performance but still better than previous expectations due to stable unit profitability. Morgan Stanley forecasts that the net profit margin of the Huachen BMW joint venture is more resilient, with an increase of 0.5 percentage points from 2025 to 2027, but the sales volume during this period is forecasted to decrease by about 6%. Morgan Stanley has raised the target price of Huachen China from 3 Hong Kong dollars to 3.4 Hong Kong dollars, with a rating of "in line with the market". Huachen China issued a profit warning, expecting a decrease of 34% to 36% in pre-tax profits for the six months ending in June compared to the same period in 2024, mainly due to a decline in performance of the major joint venture Huachen BMW. However, it is expected that post-tax profits will increase by 10% to 13% year-on-year, mainly due to a significant reduction of 83% in withholding tax resulting from reduced distribution of dividends during the period.