On Friday, Merrill Lynch Downgraded Daphne'S Valuation Losses.

On Friday, Bank of America Merrill Lynch (NYSE:BAC) Mei Yin Merrill lowered the Daphne International Holdings Ltd (0210.HK) rating, from buying to neutral, and Merrill Lynch said.

The profitability of manufacturers is expected to recover, otherwise the market will be lowered.

This year's and next year's earnings forecasts, as well as private equity TPG convertible bonds and other unfavorable factors are the reasons for the bank's downward expectations.

In the middle of last month, Daphne released its three quarter results. The core brand business of the group achieved 6.3% growth in the same quarter in the three quarter, an improvement of 2.4% over the two quarter.

Sales promotion mainly benefited from the star effect of the new brand spokesperson Gianna Jun and the low base of the same period last year (18.1% in the same store sales).

Core of the first three quarters

The same store sales in the same period last year fell by 12.2% over the same period last year, but there was still a 1.8% decline.

Merrill Lynch said that it is expected that Daphne will continue to decline in the same store sales in the same quarter due to the initial warm weather in the fourth quarter, and the promotion action will continue to pressure Daphne's gross margins.

Bank of America's latest target price for Daphne is HK $4.05, after HK $4.3.

Affected by the news, Daphne shares fell sharply, closing at 14:12 in Beijing, down 5.46% to HK $3.46.