By Justina Lee
China Feihe Ltd. shares suffered their biggest intraday percentage drop in a year after it forecast a drop in first-half net profit.
The infant-formula company's shares slid by as much as 17% to 6.93 Hong Kong dollars (US$0.88) and were last 13% lower at HK$7.27.
China Feihe said late Friday that it expects first-half net profit to drop 33%-42% from a year earlier to between 2.2 billion Chinese yuan (US$325.9 million)and CNY2.5 billion.
The company also expects its revenue in the first-half to decline 15%-17% from a year earlier.
China Feihe said that earnings were likely weighed down by a revenue fall that stems from a decline in China's birth rate.
Higher marketing expenses on new products and reduced government grants could also weigh on its net margin in the first-half, Citi analysts say in a note. They say China Feihe would likely pressured by a weak industry outlook in the second-half and in 2023.
Citi cut the stock's target price to HK$9.20 from HK$10.80, but maintaind a buy rating citing its undemanding valuation.
Write to Justina Lee at justina.lee@wsj.com
$(END)$ Dow Jones Newswires
July 24, 2022 23:01 ET (03:01 GMT)
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