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Morgan Stanley (NYSE:MS) upgraded Weilong Delicious Global Holdings Ltd (9985:HK) from Equalweight to Overweight Wednesday, while raising its price target to HK$18.30 from HK$18.10.
The upgrade comes after Weilong’s share price declined 9% over the past two months, underperforming both the MSCI China Consumer index, which gained 5%, and new consumption names that rose 27% on average during the same period.
Morgan Stanley had previously downgraded Weilong to Equalweight in April, citing concerns about weakness in seasoned flour products and potential slowdown in specialty store openings, while also noting that first-half 2025 net profit performance might disappoint investors due to challenging comparisons with first-half 2024.
The firm now sees potential upside from breakthrough opportunities in new sales channels, though it notes these won’t be as significant as the company’s existing snacks specialty stores or Douyin presence.
Additional factors supporting the upgrade include potential milestones in overseas market entry and the completion of a share placement in early May that removed concerns about earnings per share dilution.
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