UBS: Times Electric (03898)'s revenue and net profit for the third quarter are roughly in line with the expected target price of HK$50.4

The Zhitong Finance App learned that UBS released a research report stating that the third-quarter revenue and net profit of Times Electric (03898) were generally in line with expectations, maintaining a “buy” rating and target price of HK$50.4. The bank expects a neutral market response.

Times Electric's revenue and net profit for the first nine months of this year increased 11% and 3%, respectively, to 20.8 billion yuan and 2.8 billion yuan, which means that revenue and net profit for the third quarter increased 17% and 4% year on year, respectively, to 7.7 billion yuan and 1.1 billion yuan, which is generally in line with market expectations. The bank believes that sales growth was driven by rail vehicle business (up 11% year on year in the first nine months) and emerging business (power semiconductors up 13% year over year, electric drives for new energy vehicles up 39% year on year).

The bank pointed out that gross margin for the first nine months fell slightly by 0.1 percentage points to 32.3% year on year, meaning that gross margin for the third quarter fell 1.8 percentage points year on year, as rising raw material costs dragged down emerging businesses; net profit margin for the first nine months fell 1 percentage point year on year to 13.5%, mainly due to a decrease in net financial revenue (83 million yuan, compared with 240 million yuan in the same period last year) and a 22% year-on-year increase in sales expenses.