Last night, Beauty China warned that its 4Q08 earnings may be worse yoy due to reduced revenue growth and slower collections of trade receivables. As a result, it may be required to make additional provisions for the impairment of trade receivables in 4Q08. We now expect 4Q08 revenue of HK$220.2m (+4% yoy) and a net profit of HK$35.8m (-10% yoy), after taking into account the above. Following our earnings reductions of 10-22%, our target price drops to S$0.47 from S$0.54, still based on 4x CY10 P/E. Downgrade to Neutral from Outperform on the back of its weaker earnings visibility.
In our last update, we have already mentioned that the company had encountered some receivable problems in 4Q08 and expected that the company might make some impairment provision. But it seems that the situation is worse than our previous expectation. We expect the company's announcement will put some pressure on share price today. Our current FY08 net profit forecast is HK$185.6m, which is 3% lower than the consensus's HK$191m.
Sponsored Links
No comments:
Post a Comment