China Yurun warns of loss

Analyst predicts core net loss of HKD1,343m/172m.

According to Maybank Kim Eng, China Yurun announced its FY12F results are expected to record substantial decrease and loss compared with FY11 due to macro-economic uncertainties and effect of certain operational strategies already implanted cannot be fully reflected.

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The profit warning does not come at a surprise to us and the market, in our view, given management’s earlier comments pointed to a weaker-thanexpected sales recovery pace in 2H12F.

We also expect its upstream margins to  come under pressure along with disappointing volume. Overall, our current  projections implies a core net loss of HKD1,343m/172m in FY12/13F.

We are keeping our forecast and recommendation intact, pending for more colour regarding its 2013 YTD operational performance at its upcoming results briefing on 20 March.