We expect interim core earnings to dip 6% as demand for highend watches stays sluggish.
Chairman’s repayment of US$100m loan to the Swatch Group last month as scheduled helps removing the overhang, while business outlook remains subdued as consumer sentiment for luxury watches is still weak.
We cut core profit by 7% to RMB496m for FY14, and by 9% to RMB544m for FY15 to reflect the slow momentum. Trading at 6% discount to our revised TP of HK$1.39 (based on 10x 12-mth rolling PE)maintain HOLD