KGI Securities expects sunshine after the rain for China Sunsine despite weak 1H20

KGI Securities has maintained an “outperform” rating on China Sunsine, but with a lower target price of 47 cents from 60 cents previously due to weak 1H20 profits. 

The company’s revenue dropped 26% from RMB1.41 billion ($277 million) in 1H19 to RMB1.04 billion in 1H20, and profit after tax plunged 69% to RMB82 million from RMB266 million in the same period.

However, KGI analyst Chen Guangzhi said this was due mainly to the unfavourable macro environment resulting in a contraction in both average selling price (ASP) and profit margins. However, normalisation of profit margin and correction of ASP were expected by the management back in 2018 and 2019.