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On Wednesday, Goldman Sachs analyst Trina Chen adjusted the investment firm’s stance on BBMG Corp. (2009:HK) (OTC: BMBGF), downgrading the stock from Buy to Neutral and reducing the price target to HK$0.80, a decrease from the previous HK$1.00. This revision reflects a tempered outlook for the company’s earnings, particularly within its property sector.
In a detailed statement, Goldman Sachs cited a decrease in expected earnings per share for BBMG, projecting Rmb0.012 per share in 2025, Rmb0.007 per share in 2026, down from earlier estimates of Rmb0.044-Rmb0.046 per share. Additionally, the firm introduced an earnings estimate of Rmb0.017 per share for 2027. These adjustments were made to account for anticipated lower profits from the company’s property development activities.
Despite the gloomier forecast for the property sector, Goldman Sachs anticipates that BBMG’s cement operations may see improved margins. This optimism is based on the expectation of increased demand coupled with stricter production control. The company plans to extend production suspensions by 15-30 days in 2025 within its operating regions compared to last year.
However, challenges are expected to persist for BBMG’s property development arm, with a predicted 6% year-over-year decrease in gross profit for 2025. The analyst foresees ongoing difficulties affecting the company’s bottom line.
The revised 12-month price targets set by Goldman Sachs now stand at HK$0.80 and Rmb1.25, down from HK$1.00 and Rmb1.65, respectively. This adjustment suggests an 8% potential upside and a 23% downside for the stock. This new outlook contrasts with the 9% return potential previously estimated for the broader China cement market coverage.
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