On Tuesday, HSBC updated its financial outlook on Airtac International (1590:TT), a company listed on the Taiwan Stock Exchange. Analysts at the firm have increased the price target for Airtac International shares to NT$1,070 from the previous target of NT$980. Despite this adjustment, the company's stock rating remains at Hold.
The revision of the price target is based on a valuation method that applies a standard deviation below Airtac's three-year average forward price-to-earnings (PE) ratio of 24.6 times. This is a slight decrease from the previously utilized PE ratio of 25.1 times. The adjustment reflects a forward-looking perspective as HSBC shifts its valuation benchmark year from 2024 to 2025.
HSBC's analysts believe that the market is currently factoring in an optimistic recovery scenario, particularly due to signs that demand in mainland China is stabilizing. The new price target takes into account the expected earnings per share (EPS) for the year 2025, which is estimated at NT$43.7. This forecast is an increase from the earlier 2024 EPS projection of NT$38.87.
The rationale behind maintaining the Hold rating, despite the heightened price target, is attributed to the anticipation of a slowdown in capital expenditures (capex) for solar and new energy vehicles (NEVs). According to HSBC, Airtac's current market valuation appears to have already integrated the prospects of a recovery in the Chinese market.
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