Daiwa Capital Markets: Raised the target price for NEXTEER (01316) to HKD 11.4, rating "Buy".

Daiwa Capital Markets released a research report stating that NEXTEER (01316) achieved a mid-term revenue growth of 3.9% year-on-year to $2.329 billion, setting a new record, while net profit increased by 35.2% year-on-year to approximately $85.8 million. The adjusted EBITDA margin widened by 1 percentage point to 11.3%, mainly driven by improved business performance in the EMEASA (Europe, Middle East, Africa, and Southeast Asia) region. Management expects an effective tax rate slightly below 25% this year, compared to the previous forecast of 33%. Extending the valuation basis from 2026 to 2027, they maintain a target price-to-earnings ratio of 20 times, raising the target price from HK$8.3 to HK$11.4, with a rating of "Buy." The report noted that last year's tariff costs of approximately $8 million have been recovered; however, the $24 million cost associated with the cancellation of the North American electric vehicle project has not yet been accounted for. Backlogged orders reached $3.3 billion, a year-on-year increase of 120%, with management reaffirming a full-year target of $6 billion. The first steer-by-wire project has been put into production, but management expects limited contribution from this technology to the group's revenue before 2030. In response to the latest performance, Daiwa has adjusted NEXTEER's revenue forecasts for 2026 to 2028 down by 0.9% to 1.1%, raised the EBITDA margin forecast for the EMEASA region from the original 8% to 11.5%, and lowered the effective tax rate forecast from 33% to 24.5%.