CTIHK (06055) shares have continued their downward trajectory, falling over 4% in today's trading session. At the time of writing, the stock was down 4.1% to HK$19.66, with a turnover of HK$615 million.
The decline follows the company's recent profit alert, which forecasts a significant year-on-year decrease in both revenue and profit for the first half of the year. The company anticipates a revenue drop of approximately 25% to 30%, alongside an expected profit decline of about 10% to 15%.
The primary reasons cited for the downturn are challenges within its core import and export operations. The import business for tobacco leaf products has been adversely affected by international trade relations and shipment scheduling issues, leading to a lower volume of imported leaf compared to the same period last year. Furthermore, the cigarette export business has experienced shipment delays due to phased adjustments in the operational processes of the domestic duty-free market.
Despite the current headwinds, some analysis suggests a potential for stabilization in other areas. It is projected that the company's operations in Brazil and its tobacco leaf export business will maintain steady performance. Additionally, the new tobacco business is expected to show some recovery from a low base in the previous period.
The prevailing view is that the current revenue contraction is largely attributable to temporary external factors. Should geopolitical tensions and trade frictions ease in the second half of the year, coupled with an acceleration in process adjustments, the pressure on revenue could gradually diminish.
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