Goldman Sachs: Maintains a "Neutral" rating on Neway Networks (01686), raises target price to HKD 6.

Goldman Sachs has released a research report, raising its revenue forecasts for NewNet (01686) for the fiscal years 2027 to 2029 by 1% to 5% and its EBITDA forecasts by 1% to 6%. This reflects better-than-expected performance, the latest move-in schedule, recent contract premium pricing, and rent adjustments, while also lowering the assumptions for net capacity additions. The target price has been raised from HKD 5.4 to HKD 6, maintaining a "Neutral" rating. The company announced that its performance for the second half of fiscal year 2026, ending in June, exceeded expectations. Total revenue increased by 10% year-on-year to HKD 1.609 billion, surpassing Goldman Sachs' and market expectations by 4% and 1%, respectively. Benefiting from the ramp-up in capacity of MEGA IDC and MEGA Two, as well as the upward rent adjustments and contract renewals from major financial and corporate clients, the recurring revenue from data centers and IT facilities rose by 10% year-on-year. EBITDA increased by 12% year-on-year to HKD 1.204 billion, exceeding Goldman Sachs' and market expectations by 7% and 5%, respectively. Net profit rose by 24% year-on-year to HKD 614 million, surpassing both the bank's and market forecasts by more than 10%. The gross profit margin reached 60.3%, an increase of 3.2 percentage points year-on-year, also exceeding expectations.