M Stanley Downgrades CHINASOFT INT'L to Underweight, Slashes TP to HKD2.6
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M Stanley has downgraded CHINASOFT INT'Lfrom Equalweight to Underweight, slashing its target price from HKD6.6 to HKD2.6. The downgrade reflects pressure on IT outsourcing revenue due to margin compression among major clients linked to AI programming. Despite management's forecast of over 70% growth in AI-related revenue by 2026, non-AI businesses are expected to dominate revenue. Revenue forecasts for 2026 to 2028 have been cut by 16.7%, 17.3%, and 13.3%, with adjusted EBIT and net profit forecasts also significantly reduced, indicating potential declines in revenue and gross margin.
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