Morgan Stanley lowers DAMAI ENT target price to 0.9 yuan, rating "Overweight"

Morgan Stanley published a research report, lowering the target price for DAMAI ENT (01060.HK) from HKD 1.20 to HKD 0.90, corresponding to a forecasted price-to-earnings ratio of 21 times for 2027, with a rating of "Overweight."

The bank stated that DAMAI ENT's stock price has fallen about 40% since its peak in February, reflecting a decline in IP business valuation, concerns over the film business, a slowdown in revenue from Sanrio-related IP, and profit pressure from overseas expansion investments. The bank expects the company's revenue in the second half of the year to remain roughly flat, with normalized net profit growth of 26%, and has lowered its revenue forecasts for 2026 to 2028 by 4% to 9%, with normalized net profit forecasts reduced by 10% to 17%.

The bank believes that the market reaction is overly pessimistic; although DAMAI ENT's film business has seen a decline in revenue, reduced content investment and a focus on profitability will drive performance improvement. The valuation is attractive