Citigroup lowers Times Electric's target price to 40 yuan, outlook for this year is weak

Citigroup's research report indicates that, similar to China CNR Corporation Limited (01766.HK)'s conservative guidance for 2026, Times Electric (03898.HK) also holds a weak outlook for this year's rail transit equipment and emerging equipment business, particularly in power semiconductors.

The firm believes that the slowdown in high-speed train tendering not only hampers revenue growth in rail transit equipment but may also lead to a contraction in gross margins, as train sets are a high-margin business. As for the power semiconductor business, management's concerns stem not only from pricing pressure but also from a lack of experience in enhancing silicon carbide (SiC) wafer production capacity.

The firm has lowered its earnings forecasts for 2026 and 2027 by 10% and 12%, respectively, and reduced the target price from HKD 42.5 to HKD 40, maintaining a "Neutral" rating, as management plans to enhance shareholder returns through share buybacks