STOCKS | Morgan Stanley Says Laopu Gold Pre-Announcement Missed Expectations, Sees Weak Near-Term Sentiment

Morgan Stanley said Laopu Gold's profit warning fell short of market and its own expectations, and that its share-price sentiment may be weak in the near term. According to Jin10, the firm said Laopu Gold's first-half sales, including tax, and revenue rose 60% to 66% year on year to RMB 22.7 billion to RMB 23.35 billion and RMB 19.8 billion to RMB 20.45 billion, respectively, with the midpoints 10% below the firm's and market forecasts and the non-International Financial Reporting Standards figure 9% below expectations.

Morgan Stanley said Laopu Gold's second-quarter sales were RMB 3.5 billion based on the midpoint, with average monthly sales of about RMB 1.2 billion, only 40% of the level in March, and that the performance was weaker than expected. According to Jin10, it also said second-quarter net profit was between RMB 600 million and RMB 700 million, below market forecasts, and that it expects the market to cut earnings forecasts for this year and next year while watching shareholder returns and management guidance in the interim results. The firm reiterated its Overweight rating and kept its target price at HK$590.