Sound Global

Sound Global - Drop was most probably due to grp's latest results last week, which was below expectations. 4Q12 hurt by slower sales and higher interest costs. Net profit of Rmb82.4m (-23% yoy, -46% qoq) and sales of Rmb689.5m (15%yoy,- 11% qoq) were 44% and 19% below forecast. All segments underperformed with the biggest shortfall coming from the Product segment. Apart from lower sales, finance costs skyrocketed to Rmb173m from Rmb108m mainly due to interest expense for the US$ senior notes. Taxes were also higher at 21% vs our assumed rate of 13%. FY gross margins however, were stable at 30%