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Investing.com - HSBC initiated coverage on Zhejiang Shuanghuan Driveline Co Ltd (SZ:002472) with a Buy rating and set a price target of RMB58.00, representing approximately 56% upside from current levels.
The investment bank forecasts a 20% net profit compound annual growth rate for the Chinese drivetrain manufacturer between 2024 and 2027, driven by revenue growth and improvements in scale and production efficiency.
HSBC expects the company’s passenger vehicle gear sales growth to moderate from 2026 due to slower electric vehicle sales in China, but believes this will be offset by accelerating growth in smart drive units and humanoid robot reducers.
The price target of RMB58.00 implies 32 times 2026 estimated price-to-earnings ratio and 28 times 2027 estimated price-to-earnings ratio, according to HSBC’s analysis.
HSBC identified several potential downside risks to its outlook, including falling margins, lower market share gains in humanoid robots, slower humanoid robot commercialization, and slower technological advances in e-bike drivetrains.
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