Morgan Stanley released a research report indicating that SHENZHOU INTL (02313) forecasts a 38% to 43% year-on-year decline in net profit for the first half of this year. This is primarily attributed to rising raw material and labor costs, with some production capacity still in the ramp-up phase, coupled with the impact of higher oil prices on raw material costs. Additionally, the appreciation of the renminbi against the US dollar, along with weak demand, has led to declines in both shipments and revenue for the first half.

However, considering that investors may have fully anticipated the company's weak first-half performance, Morgan Stanley believes any stock price correction will present a good entry opportunity. The firm maintains an "Overweight" rating with a target price of HKD 50. The bank forecasts that the median decline in Shenzhou International's net profit will be around 40% to 41%, which is below its previous estimate of a 27% drop and the market consensus of an 18% decline. It expects short-term volatility in the stock price before the company formally announces its first-half results.