Citi Raises MAN WAH HLDGS (01999.HK) Rating to Buy and Sets Target Price at $6.5

The analyst rating for MAN WAH HLDGS was upgraded from Neutral to Buy by Citi Research due to several key factors: 1. Acquisition of Gainline Recline Intermediate Corp.: The US$32 million acquisition is aimed at strengthening MAN WAH's sofa business in the US, which is expected to enhance its competitive position in the market. 2. Breakeven Plans: The Group plans to achieve breakeven for Gainline within the next 12 months by reducing supply chain procurement costs, which includes purchasing metal frames at lower costs and benefiting from bulk purchase discounts and automation. 3. Adjusted Earnings Forecasts: Citi Research adjusted its earnings forecasts for FY2026-2028, reflecting a slight decrease in FY2026 but increases in the following years, indicating a positive outlook. 4. Increased Target Price: The target price was raised from $5.3 to $6.5, based on an 11x PE ratio for FY2026, suggesting confidence in future growth. 5. Attractive Valuation: The expected return rate for FY2027 is over 6%, with a compound annual growth rate (CAGR) of 7% in earnings per share (EPS) over three years, making the valuation appealing. These factors collectively contributed to the upgrade in the analyst rating.