On Friday, Citi downgraded Merida Industry Co Ltd. (9914:TT) stock from Buy to Neutral, adjusting the price target to NT$215 from the previous NT$250. The revision reflects concerns over the company's outlook, particularly in the China market, which has experienced significant growth over the past two and a half years.
The downgrade is based on several factors, including potential risks in the China market following its rapid expansion, subdued demand in the European and US markets, and anticipated lower earnings for 2025. Citi analysts highlight that despite healthier inventory levels, demand in Western markets remains tepid.
Citi's analysis suggests that the Chinese market could weaken in September, and expectations of low seasonality could negatively impact near-term sentiment and lead to profit-taking pressure. This outlook has prompted the firm to initiate a 30-day negative catalyst watch on Merida Industry.
The downgrade and price target adjustment come amid a broader assessment of the company's performance and market conditions. Citi's move to a more cautious stance on Merida Industry reflects a recalibration of expectations as the market landscape for the cycling industry evolves.
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