Longcheer

Longcheer: Annouced 2Q10 Results which missed analyst expectations. Rev at Rmb1,036m was -3%YoY (Analysts expectations at Rmb1,017m) while net Profit at Rmb16m was -60%YoY (Analyst expectations at Rmb52.3m)…

Revenue declined mainly to decline in average selling prices, despite shipment volume increased 40%. Gross profit margin for 2Q FY11 declined significantly from 10.2% in 2Q FY10 to 4.9%, attributable to severe price competition among the upstream chipset makers, the pace of development of the 3G market in China is slower than expected, lower than expected sales during the festive season in India resulting in excess inventor and increased preference for smartphones has resulted in the weak demand and rapid price margin erosion for feature phones….

Going forward, grp aims to continuing with the process to enhance value add by transitioning product portfolio from low valued feature phones to high valued products including 3G and smartphones. The transition is however expected to take some time to materialize, and most houses are bearish on the near-term prospects of grp.