A research report indicates that NEXTEER (01316) delivered first-half net profit that exceeded expectations, reaching approximately US$63 million (up 305% year-on-year and 40% half-on-half). The earnings beat was driven by margin expansion. Gross margin for the first half of 2025 increased 1.5 percentage points year-on-year and 0.6 percentage points half-on-half to 11.5%, supported by cost optimization measures, improved manufacturing efficiency, and restructuring initiatives.

Based on the higher margin profile, net profit forecasts for 2025-2027 have been revised upward from US$107 million, US$125 million and US$146 million to US$141 million, US$164 million and US$193 million respectively. The rating has been upgraded from "Hold" to "Buy", with the target price raised significantly from HK$5 to HK$10.

Gross margin assumptions for 2025-2027 have also been revised higher from 11%, 11% and 11% to 11.5%, 11.5% and 11.5% respectively, based on cost optimization measures, manufacturing efficiency improvements and restructuring. EBIT margin assumptions for 2025-2027 have been increased from 4%, 4.4% and 4.8% to 4.1%, 4.6% and 5.1% respectively, reflecting the positive first-half 2025 EBIT margin performance and cost-saving initiatives.