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Investing.com - Goldman Sachs upgraded Sany Heavy Equipment (SS:600031) (OTC:SNYYF) from Sell to Neutral and raised its price target to RMB21.50 from RMB17.00 following the company’s second-quarter 2025 results.
The upgrade reflects Sany’s improved free cash flow generation capability, which has reached 1.5-2 times net profit compared to its historical mid-cycle average of 1.2 times, according to Goldman Sachs.
The investment bank also cited better-than-expected improvements in operational efficiency that prompted a 5-6% increase in its 2025-2027 earnings per share estimates, bringing them largely in line with Wind Consensus.
Goldman Sachs noted that with Sany’s free cash flow yield on track to reach double digits in the next couple of years, there is scope for improved shareholder returns through higher payouts and potential share buybacks, which management appeared increasingly open to during the analyst call.
The firm sees a favorable near-term setup with the domestic cycle turning upward, emerging market strength sustaining, and more signs of developed market cycle bottoming out, which could provide share price support despite expensive earnings-based valuation.
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