Nomura lowered its target price for WH Group (00288) to HK$10.1 from HK$11.4 and maintained its "buy" rating.
The research house said WH Group's 2Q operating profit fell by 12%, mainly due to the weak US business with operating profit decline of -73%. For the US, Nomura thinks the worst is behind us with 2Q recording the hardest hit from the pandemic, and it expects a gradual recovery in 2H.
While the sales recovery may be bumpy depending on COVID-19 situation, Nomuar sees more visibility in margin recovery, as the high incremental COVID-19-related cost incurred in 2Q should decline substantially in 2H.
Nomuar lowered its FY2020 earnings by 14% to reflect the bigger-than-expected COVID-19
impact on the US business, partially offset by the better China business.
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