UBS: Raises TIMES ELECTRIC target price to HKD 48.3 and upgrades earnings forecast, rating "Buy"
UBS raised the target price for TIMES ELECTRIC to HKD 48.3 and maintained a "Buy" rating, primarily based on its performance. TIMES ELECTRIC's operating revenue and net profit for the first three quarters grew by 15% and 11%, reaching RMB 18.8 billion and RMB 2.7 billion, benefiting from the rapid growth of rail transit and emerging equipment products. In the third quarter, revenue and net profit increased by 10% and 8% year-on-year, with a gross margin rising to 33.2%
According to the Zhitong Finance APP, UBS has released a research report stating that based on performance, it has slightly adjusted the earnings per share forecast for Times Electric (03898) for 2025 to 2027 upwards by 3% (reflecting an improvement in profit margins). At the same time, it has raised the target price based on the sum-of-the-parts valuation method, mainly reflecting the market's re-evaluation of the power semiconductor business. The target price has been increased from HKD 45.2 to HKD 48.3, corresponding to a 13.7 times expected price-to-earnings ratio for 2026. Considering its solid core business and the growth potential of new businesses, it maintains a "Buy" rating for H-shares.
In the first three quarters, Times Electric's operating revenue and net profit increased by 15% and 11% year-on-year, reaching RMB 18.8 billion and RMB 2.7 billion, respectively, mainly driven by the healthy growth in railway passenger volume in the rail transit business and rapid growth in emerging equipment product businesses. In the third quarter, revenue and net profit increased by 10% and 8% year-on-year, reaching RMB 6.6 billion and RMB 1 billion, which is basically in line with market expectations. Due to the upgrade of the product structure in the rail transit business, the gross profit margin increased by 3 percentage points year-on-year in the first three quarters. The gross profit margin and net profit margin in the third quarter increased by 1 percentage point and decreased by 0.3 percentage points year-on-year, reaching 33.2% and 15.9%, respectively. The net cash inflow from operating activities in the first three quarters was RMB 2.1 billion (compared to a net inflow of RMB 554 million in the same period last year)
