Bloomberg News

Skyworth Falls in Hong Kong After Reporting Higher Costs

November 25, 2011

(Updates with analyst rating cut in third paragraph.)

Nov. 25 (Bloomberg) -- Skyworth Digital Holdings Ltd., a Chinese maker of televisions, fell the most in more than two months in Hong Kong trading after increased spending on marketing and research reduced the company’s profit growth.

Skyworth dropped 10 percent to HK$3.17 at the close of trading, the biggest decline since Sept. 19. Hong Kong’s benchmark Hang Seng Index dropped 1.4 percent.

Katharine Song, an analyst at Sinopac Securities Corp. in Shanghai, cut her recommendation on the stock to “neutral” today, saying first-half earnings were less than expected. Sales and distribution costs jumped 37 percent in the six months ended Sept. 30, and general and administrative expenses rose 30 percent as research spending climbed, Skyworth said yesterday.

The company was also hit by higher labor costs, said Song, who cut the recommendation on shares of the Shenzhen, southern China-based company from “buy.” She didn’t provide her estimate for first-half profit.

Skyworth said its first-half net income rose 30 percent to HK$461 million ($59 million), and revenue climbed 17 percent to HK$13.1 billion.

--Editors: Lena Lee, Tan Hwee Ann

To contact the reporter on this story: Mark Lee in Hong Kong at wlee37@bloomberg.net

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net


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