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HSBC downgrades Yue Yuen Ind (00551) to "hold"

  HSBC Global Research maintained its target price
for Yue Yuen Industrial (00551) at HK$35.9, but downgraded its rating to "hold" from "buy"
on valuation.
  After a good run in the share price since troughing in November-2017, the research house
now sees limited catalysts in 2018. HSBC turned cautious on the OEM business performance 
given (1) soft top line: 2-month 2018 sales growth turned negative; (2) low margin 
visibility: HSBC continues to believe more automation and vertical integration will help 
to boost profitability longer term but margin expansion is likely to slow given limited
operating leverage.
  HSBC lowered its earnings forecasts by 6-7% for FY2018-19 on conservative assumptions on
the OEM business.

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