JPMorgan Slashes CSC Development Target Price to HK$7 Amid Disappointing Results

CSC Development's (03311.HK) share price plummeted over 6% on August 26th after JPMorgan downgraded the stock from 'Neutral' to 'Underweight', slashing its target price from HK$8 to HK$7. The bank cited first-half results that fell short of expectations, with net profit after tax declining by a staggering 18% year-on-year to RMB 4.3 billion.

Revenue during the period dropped 23% year-over-year to RMB 43.9 billion, despite an improvement in gross margin by 3.6 percentage points to 18.6%. The company's performance was lackluster across all major markets, with Mainland China, Hong Kong, Macau, and Taiwan experiencing declines in revenue ranging from 8% to 25%.

JPMorgan believes that achieving the company's full-year earnings target of flat compared to last year will be extremely difficult, given the softening infrastructure demand in Mainland China and slower conversion of backlog orders. The bank has accordingly lowered its 2026-2028 net profit after tax forecasts by an average of 10%, with return on equity expected to fall to around 10%.