[ET Net News Agency, 18 May 2018] Citi Research lowered its target price for VTech
Holdings (00303) to HK$90 from HK$105, and reiterated its "sell" rating.
The research house cut its earnings forecasts by 14-15% in FY2019-20 because FY2018
earnings of US$206m is 5% behind Citi's expectation.
It believes the earnings downside risk is escalating for gross margin contraction as a
result of continued material cost pressure on commodities, ongoing labour cost hike, lack
of new killer products to offset persistent drags of residential TEL market shrinkage,
downsizing sales with Toys R Us for liquidation and Leapfrog (LF) tablet sales. (KL)