Rieter: UBS cuts to "sell" on challenging market conditions
17/10/2019 13:15
** UBS downgrades Swiss textile industry supplier Rieter
RIEN.S to "sell" from "neutral", cuts target price to CHF 115
from CHF 138
** UBS says it believes that the cyclical headwinds, the
structural challenges in natural fibers and the level of local
competition are underestimated by the market
** The brokerage says that Rieter's three main Asian
countries, China, India and Turkey provide challenges for the
market as whole
** Adds that the spinning market in China is suffering over
capacities with a trade war as an additional burden; Turkey is
impacted by poor investment climate, while India suffers from a
change in tax laws that no longer favour cotton
** UBS says it doubts that Rieter will be able to fully
offset the unfavourable market conditions in Asia and Turkey,
which account for more than 80% of the company's sales
** UBS now expects Rieter to be loss making in 2019 and sees
the company's 2023 EBIT margin target of 10% at risk
((Tommyalexander.lund@thomsonreuters.com))