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On Wednesday, Citi analysts downgraded Yunnan Energy New Material Co Ltd (002812:CH) stock from Neutral to Sell, citing a challenging competitive landscape and deteriorating supply-demand dynamics in the separator sector. The analysts set a new price target of RMB20.45, down from RMB34.50.
The downgrade reflects concerns about the company’s gross margins, which are under pressure due to increasing competition. Despite Yunnan Energy’s strong positioning to benefit from the long-term growth of the global electric vehicle market, the analysts expressed concerns about the current market conditions.
According to the analysts, the separator space is facing a worsening supply-demand balance, which is impacting the company’s profitability. The outlook for the sector remains challenging as these dynamics continue to evolve.
Yunnan Energy, a key player in the production of separators for electric vehicle batteries, is navigating a complex market environment. The company’s ability to maintain its market position amid these challenges is under scrutiny.
The revised price target and rating reflect the analysts’ cautious stance on Yunnan Energy’s near-term prospects, given the current market conditions and competitive pressures.
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