[OT] Legend profit seen rocketing up 80pc
Tuesday, June 26, 2001
REUTERS
Legend Holdings, China's dominant personal computer maker, is expected to report on Wednesday an increase of about 80 per cent in profit for the year to March 31 as healthy domestic demand remained immune to global sluggishness in PC sales.
Analysts estimated Legend would report earnings of about HK$866 million, compared with HK$481 million in the previous year.
Excluding the Digital China Holdings foreign brand distributor which began trading separately on June 1, Legend is expected to report a profit of HK$705 million, according to analysts' forecasts. In the previous year, it earned about HK$365 million excluding Digital China.
Legend is expected to report that it shipped 2.61 million PCs in the year, a 77 per cent rise.
ING Barings predicted Legend, which enjoys a 30 per cent market share in China, would report pro forma revenue of HK$18.5 billion, a 78.5 per cent surge from year-earlier sales of HK$10.37 billion. Including Digital China, turnover would be HK$27 billion, an increase of 55 per cent, ING predicted.
"I think there won't be any surprises, although there are some worries about a slowdown in sales in China," said South China Securities analyst Cici Lam.
Still, she said, Legend's sales showed no signs of slowing.
Legend shares have slid recently, partly on concerns that China's PC demand could show signs of cooling off, fears over foreign-brand encroachment and expectations that for once Legend will only meet - not beat - earnings estimates.
On Friday, Legend fell 1.92 per cent to close at HK$5.10, almost half its 52-week high of HK$10.15 and 27 per cent below a peak of HK$6.95 reached in early March.
ING Barings predicted China's PC market would grow at 25 per cent to 35 per cent annually over the next few years, a sharp contrast to softness in the United States, which research firm International Data Corp recently forecast would this year show its first year on year decline in PC sales.
IDC also slashed its global PC sales growth forecast to 5.8 per cent from 10.3 per cent.
Credit Suisse First Boston (CSFB) said a recent survey of China's PC market indicated weakness in the consumer segment, with commercial demand remaining strong.
Kirk Yang, head of Asia hardware and components research at CSFB, noted that two Taiwanese component suppliers with China exposure, Silicon Integrated System and Elitegroup Computer, had seen slowdowns recently.
But Mr Yang also said, "since the second half of May, we think the weakness has stabilised".
As for the spectre of intensifying competition from overseas brands, he said: "Foreign competition, while heating up, is likely to put more pressure on the smaller China PC companies, but not Legend, in our view."
Mr Yang said company-watchers expected to hear about the state of PC demand in China from Legend management during Wednesday's earnings announcement.
Last month, Legend chief executive Yang Yuanqing acknowledged that the four million PC sales target the company had set for the year to March next year "is quite a big challenge".
Mr Yang said Legend's domestic fate depended on whether the economic malaise affecting the US reached China.
One analyst called Legend's expectations "a little bit aggressive because of increasing competition among the Western PC makers".
He expected Legend to ship 3.8 million PCs this year. |
