Citigroup: Cuts China Liansu target price to HKD 6.2, concerned about soaring oil prices impacting gross profit margin

Citigroup released a research report saying it recently held an investor meeting with the management team of China Lesso (02128). The group’s 2025 performance fell short of expectations, and combined with the recent surge in oil prices, the bank has turned more cautious about its gross margin outlook. As a result, it cut its profit forecasts for 2026 to 2027 by 30%. The target price was lowered from HK$7 to HK$6.2, and the bank maintained a “Buy” rating. However, it is more inclined toward companies with higher return profiles or better profit growth prospects in China’s infrastructure sector, such as: Zoomlion Heavy Industry (01157) > Hangcha Group (603298.SH) > China State Construction International (03311).

The bank said that although the recent conflict between the United States and Iran led to a surge in oil prices, management expects that due to inventory replenishment of raw materials, the gross margin in the first quarter of 2026 will be in line with the second half of 2025. This is because the demand momentum had already been recovering in the three months prior to the outbreak of the conflict (i.e., from last October to this January), and overseas channel business will be the main driver of growth.

(Editor: Wang Zhiqiang HF013)

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