While this represents a 26% yoy decline, it is up from May ’09’s RMB440mln, Mar ’09’s RMB800mln and Oct ’08’s 650mln.
Going forward, the lower base effect would make yoy comparisons more favourable.
And according to management, it would be comparable yoy instead of the 26% decline if they take into account the orders held back and rebates provided to distributors to weather the downturn in 1H 2009.
While the overall environment remains challenging, management is heartened by the recent signs of stabilization and believe that they will start to see more signs of stable performance next year. This is a change in management’s outlook since the collapse of Lehman Brothers in 4Q ‘08.
With management having delivered on their promises of prepayment & debts collections on time, signs of stabilization in their orders going forward and the stock still trading below its net cash of 19 cents per share (currently at 18.5 cents), we maintain BUY.
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