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Investing.com - UBS has upgraded Shanghai Hanbell Precise Machinery (SZ:002158) from Neutral to Buy, nearly doubling its price target to RMB34.80 from RMB17.80.
The upgrade comes as UBS believes both solar overcapacity pressures and the company’s underperforming compressor business have reached turning points, positioning the company for improved performance.
UBS expects internet data center (IDC) demand to drive growth in Hanbell’s compressor segment, with existing customers like Dunham Bush and potential opportunities from the Hon Hai-TECO partnership contributing to this expansion.
While UBS forecasts a 15% decline in earnings per share from 2023 to 2025, it projects a reversal to 17% compound annual growth rate from 2025 to 2029, suggesting a structural sales shift that could drive valuation improvements.
Hanbell’s share price has underperformed WIND’s liquid cooling index by 43% since the beginning of 2024, which UBS views as creating an undervalued opportunity, though it cautions about potential risks from further deterioration in the solar business or delays in IDC business progress.
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