Morgan Stanley has reaffirmed its "Overweight" rating on LAOPU GOLD (06181.HK), with a target price unchanged at HK$590. Despite the company issuing a profit alert, the results fell short of both market and the bank's expectations.
The bank anticipates that the market will revise down its earnings forecasts for LAOPU GOLD for this year and the next, and that short-term share price sentiment could be subdued. Attention will now turn to the mid-term results for updates on shareholder returns and management guidance.
For the first half of the year, the company's sales (including tax) and revenue grew 60% to 66% year-on-year, reaching RMB 22.7 billion to RMB 23.35 billion, and RMB 19.8 billion to RMB 20.45 billion, respectively. The midpoint of these figures came in 10% below both the bank's and market forecasts.
Non-IFRS adjusted net profit rose 83% to 85% year-on-year, with reported net profit expected to increase by 93% to RMB 4.4 billion. This was 9% below the bank's and market expectations.
According to Morgan Stanley, based on the midpoint calculation, LAOPU GOLD's second-quarter sales were RMB 3.5 billion, with average monthly sales of about RMB 1.2 billion. This represents only 40% of the level seen in March this year, underperforming expectations. Second-quarter net profit ranged from RMB 600 million to RMB 700 million, also falling short of market predictions.
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