HK Stock Market Move | Hisense Home Appliances Group (00921) fell nearly 5% in late trading; Bank of America expects third-quarter revenue to decline by a mid-single-digit percentage, worsening from the second quarter.

Hisense Home Appliances Group (00921) fell nearly 5% in late trading. As of press time, it was down 4.91% at HK$20.52, with a turnover of HK$23.5294 million. Bank of America Securities issued a research report stating that it expects Hisense Home Appliances Group's third-quarter revenue to decline by a mid-single-digit percentage due to weak China revenue (a further deterioration from the low-single-digit level in the second quarter), but this will be offset by relatively steady export growth. A less favorable product mix, weaker ability to absorb cost pressures than peers, and thin profit margins all contribute to increased earnings volatility. The bank expects Hisense Home Appliances Group's third-quarter profit decline to be similar to the 34% drop in the second quarter. Given the low base, revenue and profit margins may improve compared with the previous quarter. The bank reiterates its "Neutral" rating on Hisense Home Appliances Group, as the company is more vulnerable than peers to the property cycle and cost inflation, has lower profit margins, and is more dependent on central air conditioners; this factor has already been reflected in the valuation.