Goldman Sachs: Maintaining Minhua Holdings (01999)'s “neutral” rating and reducing the target price to HK$3

The Zhitong Finance App learned that Goldman Sachs released a research report saying that Minhua Holdings (01999) issued a profit warning for the first half of the 2027 fiscal year ending at the end of September, which is far lower than expected. The company's net profit for the period is expected to fall 70% to 90% year on year, compared to the bank's original forecast of a 31% year-on-year decline. The bank lowered Minhua's earnings forecast per share for the 2027-2029 fiscal year by 15% to 35%, and lowered the target price from HK$3.5 to HK$3, maintaining a “neutral” rating.

The bank pointed out that according to the early warning revenue was generally stable, management attributed the sharp decline in net profit: first, rising prices of petrochemical products after the Middle East conflict led to cost inflation, and increased competition dragged down gross profit margins; second, earlier US acquisitions recorded operating losses due to rising raw material costs and weak market demand, and impairment losses on related goodwill and other intangible assets. The company has filed for bankruptcy protection for the acquired subsidiary. Excluding one-time impairment losses, the bank estimates that net profit for the first half of fiscal year 2027 fell about 60% year over year.