Morgan Stanley: Downgrades U-PRESID CHINA (00220) target price to HK$9.27 and lowers earnings forecast.

Morgan Stanley issued a research report stating that it has lowered the target price of U-PRESID CHINA (00220) from HK$10.7 to HK$9.2, with a rating of "in line with the market," corresponding to a forecasted P/E ratio of 16 times in 2026. The bank has lowered its profit forecast for the company for the next two years by 14%, mainly reflecting a decrease in beverage sales expectations, as well as a 4% and 5% decrease in revenue forecasts. Rising raw material prices have dragged down gross profit margins, while operating expenses ratios for the next two years have been raised by 0.6 percentage points. The bank expects the company's revenue to increase by 5% year-on-year and net profit to increase by 7% year-on-year this year. The bank stated that the growth of the beverage business will benefit from the recovery of the catering industry, but faces intensified competition. Demand for instant noodles is still weak, but price increases in the industry may help U-PRESID CHINA gain market share. The bank introduced a forecast for earnings per share of 0.59 RMB in 2028.