NEX Falls 22% as Investors Raise Concerns on Weaker-Than-Expected Business Operations

At the end of the trading session on Thursday, the share price of Nex Point Public Company Limited (SET: NEX) declined by 22.17% or THB 0.90 to THB 3.16, with a trading value of THB 1.93 billion, after investors raised concerns on weak business operations. The share price hit the floor at one point in the afternoon session.

Bualuang Securities stated that a slump in NEX stock price was due to the decrease in gross margin of the company and the share loss from Absolute Assembly Factory (AAB), as reported in the 1Q24 earnings report. The firm expected a similar trend for NEX in 2Q24, with a better overall share profit from the merger with TERA, while also expecting the gross margin to slightly increase.

As for FY2024, Bualuang Securities expected NEX’s car deliveries to be at 3,000 units, below the target of 5,556, while anticipating a surge of orders in 2H24. However, car delivery was expected to be the main difficulty for the company as the infrastructure in Thailand was not yet supported. The gross margin was expected to fall and be in line with the proportion of products, while the AAB factory still needs time to increase its utilization rate.

Bualuang Securities downgraded NEX’s earnings forecast in 2024 by 19% to THB 574 million, following uncertainty on the EV delivery and weak profit growth outlook, and revised down the PER to x16 or below an average of -1.5SD.

The firm gave a “Hold” recommendation with a target price of THB 4.4 while suggesting investors to wait for investment opportunities after the announcement of 2Q24 earnings.