We are concerned about the continued impairment of intangible assets, which has depressed earnings in the near term. We expect earnings growth to pick up when the provisioning subside.
We do not have much issues on the operations - sales and gross profit were in line with our forecasts.
However, we have a longer term concern over the two-invoice system to be implemented nation-wide in the PRC. We believe this will have an impact on Sihuan's future sales and earnings growth.
We will elaborate more about our concerns over impairment charges and two-invoice system in our coming report (just sent to production).
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