Sino Techfibre – Another Net Loss Likely To Show Up In 2Q09

Sinotech will release its 2Q09 results on 14 August. To cater to changes in the market’s preferences, Sinotech has taken up the production of more low-end products. As a result, the ASPs of its products in 2Q09 would have remained low and are likely to be similar to 1Q09 ASPs.

Owing to the adjustment of its product mix to include more low-end products, Sinotech saw a higher sales volume in 2Q09 relative to that in 1Q09. 2Q09 sales could improve by about 10% qoq to Rmb170m on the back of the sales volume increase.

Given the current low selling prices, the company is likely to continue striving for breakeven at the gross profit level. At the net profit level, we expect Sinotech to record a loss of Rmb30m in 2Q09.

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