Merrill Lynch maitains "reduce" rating on Kelon over weak performance

Merrill Lynch said in a research note to its clients that Guangdong Kelon Electrical(0921) 2000 loss widened to RMB688mln, much higher than the market expectation of RMB100mln, which led to the drop of the stock. Merrill Lynch said that investors should reduce their stock due to weak fundamentals of the company.The research note also showed that Kelon interim earnings were RMB109mln, but the loss in the second half year was RMB797mln, which made the annual earnings shed 30%. Gross profit ratio shed from 31% in 1999 to 16% in 2000. Merrill Lynch said that under severe competition, Kelon had difficulty in turning to back this year and the next year. The expected loss per share in 2001 and 2002 was RMB0.297 and RMB0.034.  

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