Goldman Sachs: Raises target price of Shenzhou International to HK$74, maintains "buy" rating.

Goldman Sachs released a research report stating that Shenzhou International's first half revenue slightly exceeded expectations, but operating profit fell short of expectations by 1%, due to rising labor costs leading to lower gross profit margins and operating profit margins than expected. Net profit exceeded the bank's expectations by 6%, due to increased government subsidies and exchange gains among other factors. On the positive side, the bank is encouraged by the company's orderly progress in orders, benefiting from stable market share growth from key customers and lower sales exposure to the US market. However, on the other hand, the recovery in gross profit margins is slower than expected, reflecting the inability to effectively pass on rising domestic labor costs to customers. The bank has adjusted its net profit forecasts for 2025 to 2027 by -0.2% to +0.6%, raising the target price from HK$71 to HK$74, and maintaining a "buy" rating.