Chinese computer giant Legend Holdings Ltd is expected to report Wednesday a six month net profit increase of up to 18 percent, boosted by continued strong personal-computer sales in China, analysts said.
However, some analysts suggest the second quarter may show a softening in sales from the first quarter, triggered by increased competition and slowing consumer demand which could pressure margins.
Analysts surveyed by AFX-Asia, an AFP-owned financial newswire, forecast a net profit of between HK$433.89 million and HK$500.89 million (US$55.7 and US$64.3 million) compared with HK$408.28 million a year earlier.
Legend booked a three months to June net profit of HK$250.89 million, up 81.7 percent from HK$45.80 million a year earlier with sales of some 651,000 PCs.
Goldman Sachs analyst Tim Ariowitsch expected the company to report a net profit of HK$479.89 million for the six months, with second quarter to September earnings expected to reflect a slowdown in sales to HK$5.5 billion from HK$6.09 billion in the first.
Legend was likely to report softening sales in its core China consumer market, said Victor Wong Deutsche Bank analyst Victor Wong, although corporate sales are expected to remain robust.
Deutsche was currently reviewing its net profit forecasts following indications from Legend that PC sales in its second quarter were weaker than it had expected, he said.
Theodore Teo, analyst for Nomumra International (Hong Kong), forecast a net profit of HK$433.89 million for the half.
"Everyone's talking about Legend lowering its sales forecasts but that is already reflected in the share price and now it is just a question about what that is going to be," he said.
Teo said PC sales would rise to around 780,000 units in the second quarter.
"This current [third] quarter will be interesting, as the second quarter, like the previous quarter, was a consumer quarter. This quarter will be a commercial PC quarter," he said.
Nevertheless, Teo said he was expecting the third quarter to be better than the second in terms of shipments.
An analyst with a local brokerage said his house forecast a net profit of HK$500.89 million for the half, with second quarter earnings expected to be flat.
He expected to see unit sales increase to around 830,000 for the second quarter based on the fact that second quarter sales are traditionally stronger than the first.
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