AVIC Jonhon Downgrade to Neutral on Defense Margin Pressure

Goldman Sachs downgrades AVIC Jonhon to Neutral as persistent margin pressure in its core defense business and stabilizing demand offset emerging opportunities in data center cooling.

Key Takeaways

• 1.Downgrade to Neutral from Buy due to a balanced risk-reward profile and limited price target upside.
• 2.Defense segment margins are under pressure due to elevated raw material costs (silver and copper) and limited price pass-through mechanisms.
• 3.Emerging growth in data center applications, specifically liquid-cooling and optical-module products, is a positive medium-term driver but currently a small contributor.

Table of Contents

• Estimates and rating change
• Upside risks
• Downside risks
• Investment thesis, Valuation methodology and Risks
• Price Target Risks and Methodology - AVIC Jonhon
• Disclosure Appendix

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