Source : investing, Monday, 2024/9/23
Morgan Stanley downgraded Hota Industrial (1536:TT) (OTC: HOTIF) from “equal weight” to “underweight”, with a significant reduction in the target price to NT$40.00 from NT$61.00 previously. The adjustment follows a significant drop in Hota’s share price following the company’s loss of market share to Chinese competitors supplying Tesla’s Shanghai plant..
The company noted that although Hota Industrial has secured other projects in the electric vehicle (EV) space, the financial impact of these new projects is currently minimal and will need time to develop. This situation suggests that investors may adopt a cautious stance, waiting for clearer evidence of improved operations before committing to further investments..
Morgan Stanley noted that Hota’s valuation, which is 33 times the expected price-to-earnings ratio for 2025, seems high given the company’s precarious fundamentals. This is despite potential opportunities in the robotics sector and ongoing discussions between Main Drive Technology, an investment by Hota, and Tesla, which has not yet yielded tangible results.
The Morgan Stanley report predicts that additional earnings reviews will put further pressure on the performance of Hota Industrial’s stock. The downgrade reflects concerns about the company’s ability to meet market expectations and the impact of competitive challenges on its financial prospects.
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