[ET Net News Agency, 19 March 2018] HSBC Global Research lifted its target price for
Crystal International (02232) to HK$9 from HK$8.9, and reiterated its "buy" rating.
The research house estimated Crystal's core net profit was up 42% yoy, excluding listing
expenses and other income. The results were 3% lighter than HSBC had expected due to a
soft gross margin in 2H (-1.2ppt) and widened loss from associates as its joint venture in
Vietnam with Pacific Textiles (01382) was suspended.
The cash conversion cycle improved by four days yoy during the year and net gearing was
13% at end of the year.
HSBC expects Crystal's margins to continue to improve by (1) continuing to leverage its
cost advantages in Vietnam and Bangladesh; (2) enhancing its product mix for which
high-margin business (i.e. intimates) should grow faster; and (3) becoming vertically
integrated. (KL)