Nomura/Instinet reiterated a Reduce rating and $12.31 price target on Hollysys Automation Technologies (NASDAQ: HOLI) following the company's 4Q earnings report. Analyst Patrick Xu cut EPS by 4% for FY18F/19F mainly by raising opex assumptions.

Management guided non-GAAP profit of USD100-110mn for FY18F, or roughly USD99-109mn in GAAP profit. Nomura/Instinet thinks the implied ~50% profit growth is aggressive. Management also guided USD130-140mn in non-GAAP profit for FY17 in Aug 2016 and eventually delivered only USD70mn. Management is yet to announce the dividend for FY17 and says it will be 10% or more in terms of payout ratio.

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Shares of Hollysys Automation Technologies closed at $19.01 yesterday.