DJ MARKET TALK: Sino Techfibre Off 10.3%; Outlook Bleak - DMG
0209 GMT [Dow Jones] Sino Techfibre (AD8.SG) continues to slide as investors digest 4Q08 results released before market open yesterday; shares down 10.3% at S$0.13, follows 3.3% drop yesterday; support tipped at Oct. 2008 all-time low of S$0.115.
China-based microfibre and polyurethane (PU) synthetic leather maker reported 75.2% on-year fall in 4Q08 net profit to CNY34.0 million driven by lower average selling prices (ASP). Company warns in statement 1Q09 results to be significantly affected by reduced demand, price pressure. DMG says 4Q08 result beat expectations as broker had forecast losses but performance may deteriorate, "near term outlook remains bleak and uncertain; we believe it is still possible for ASPs and gross margins to succumb to our assumed conservative 4Q08 levels."
Still, maintains Buy call with unchanged S$0.35 target price as says stock looks cheap, trading at less than 2X forward PE.