However, KGI analyst Chen Guangzhi said this was due mainly to the unfavourable macro environment resulting in a contraction in both average selling price (ASP) and profit margins. However, normalisation of profit margin and correction of ASP were expected by the management back in 2018 and 2019.
KGI Securities has maintained an “outperform” rating on China Sunsine, but with a lower target price of 47 cents from 60 cents previously due to weak 1H20 profits.
The company’s revenue dropped 26% from RMB1.41 billion ($277 million) in 1H19 to RMB1.04 billion in 1H20, and profit after tax plunged 69% to RMB82 million from RMB266 million in the same period.
