Daiwa downgraded MINTH GROUP's target price to 50 yuan, maintaining a "Buy" rating

Daiwa published a research report stating that MINTH GROUP (00425.HK) will experience a slowdown in revenue growth for its traditional automotive parts business in 2025. However, benefiting from the resilience of its plastic and metal decoration business, the overall gross margin of the traditional business remains stable. Management emphasized that fluctuations in aluminum and plastic prices have minimal impact on the company's long-term profitability. Thanks to improved operational efficiency and strict capital expenditure control, the traditional automotive parts business generated RMB 2.7 billion in free cash flow last year, and with the dividend payout ratio increased to 30%, it provides funding for shareholder returns and investments in emerging businesses.

The firm has lowered its net profit forecast for MINTH's traditional automotive parts business revenue and profit margins, reducing its 2026 to 2027 net profit forecast by 12% to 14%, and has adjusted the target price from HKD 52 to HKD 50, maintaining a "Buy" rating