Key Takeaways:
- BUSYMING shares surged 8.2% to HKD359.8 on June 1
- Macquarie reiterated Outperform, cut target to HKD572 from HKD588
- Short selling ratio stood at 34.6%, signaling potential for further squeeze
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BUSYMING surges 8% as Macquarie says subsidy fears overdone
BUSYMING shares surged 8.2% to HKD359.8 on Monday after Macquarie said concerns over franchisee subsidies were overdone.
"The subsidy policies have strict application standards and are much more prudent than in 2024," Macquarie said in a note, reiterating its Outperform rating.
The broker lowered its target price to HKD572 from HKD588 and cut its net profit forecasts for fiscal 2026 and 2027 by 3% each, citing the potential for higher subsidies to slow margin expansion. The stock had slumped more than 20% last week after BUSYMING and competitor WANCHEN GROUP introduced additional franchisee subsidies for new stores opened near rivals in certain regions.
The rebound puts the stock on track to recoup some of last week's losses, with the new target price implying about 59% upside from Monday's close. Short selling accounted for 34.6% of turnover, or HKD36.1 million, suggesting significant bearish positioning that could fuel further short-covering.
The Macquarie reaffirmation signals that last week's selloff was overdone relative to the actual risk from subsidy changes. Investors will watch for any competitor response from WANCHEN GROUP and whether other brokers revise their ratings in the coming days.
This article is for informational purposes only and does not constitute investment advice.
