Citigroup: Downgrades Zhejiang Sanhua Intelligent Controls (02050) target price to HK$35, downgrades rating to "Neutral"

Citi Research released a report stating that the risk-return profile of Zhejiang Sanhua Intelligent Controls (02050) is currently neutral; After changing the valuation model method, the target price of Zhejiang Sanhua Intelligent Controls H-shares was reduced from HK$43 to HK$35, and the target price of A-shares of Zhejiang Sanhua Intelligent Controls (002050.SZ) was raised from RMB 40 to RMB 52. The ratings were both downgraded from "buy" to "neutral". In the automotive parts industry, the bank prefers Midea Group (00425) and Ningbo Joyson Electronic Corp. (00699) due to their more attractive valuations, and strategic involvement in the humanoid Siasun Robot & Automation field, while also benefiting from significant overseas business exposure. The bank believes that the stock price of Zhejiang Sanhua Intelligent Controls rebounded from its low point at the end of November last year, based on the market's optimistic sentiment towards humanoid Siasun Robot & Automation and artificial intelligence data centers. However, the short-term revenue contribution of humanoid Siasun Robot & Automation and artificial intelligence data centers to the company remains small, and the refrigeration business may face growth pressure due to the early squeeze in demand caused by last year's subsidy for replacing old appliances. The automotive parts business may also be affected by the decline in Tesla sales and the slowdown in mainland new energy vehicle sales.