China Dongxiang 3818

[winston]

DJ MARKET TALK: JPM Downgrades China Dongxiang To Neutral

1521 [Dow Jones] STOCK CALL: JPMorgan downgrades China Dongxiang (3818.HK) to Neutral vs Overweight, after weaker-than-expected 1H results (net profit +9.0% on-year).

Notes, results lackluster in general, while most disappointing aspect was decline in apparel average selling prices (ASP) and apparel gross margins, vs most peers who had increases on these two fronts; management noted price decline due to returned unsold goods from distributors.

"We believe the decline in apparel ASP and inability to pass on raw material cost pressure will remain as a share price overhang," says house.

Cuts target to HK$4.00 vs HK$6.50, after lowering FY10, FY11 earnings estimates by 6.0%, 8.0%. Stock down 2.2% at HK$4.07.


Source: Dow Jones Newswire