STOCKWATCH: City Telecom sharply higher after H1 to Feb results

HONG KONG (AFX-ASIA) - City Telecom (HK) was sharply higher following the release of the company's six months to February results, dealers said.

They said the rise in net profit was attributed to the improvement in IDD gross profit margins.

At 3:07 pm, City Telecom was up 0.10 hkd or 15.87 pct at 0.73 hkd on turnover of 20.64 mln shares.

The Hang Seng Index was down 141.78 points at 13,697.32.

The company reported net profit of 5.81 mln hkd during the six months to February, after it posted a loss of 52.53 mln hkd a year earlier.

Edmond Cheung, an analyst with Core Pacific Yamaichi Securities, said the results were in line with expectations.

"The gross profit margins of its IDD business rose to a nine-year high of 38 pct during the first half. The margins have reached 40-41 pct in April and May. We expect the margins could stay at around the current level during the second half of the financial year," Cheung said.

Cheung said as the company has closed down its content related businesses, its full-year expenses on the area will remain at around 11 mln hkd.

"The company should be able to remain profitable if there is no fierce price war in the IDD market," he said.

He said he has no recommendation on the stock at the moment pending the outcome of a review.

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