DBS said the lower-than-expected performance of 0088.HK was mainly due to an impairment loss of HK $22 million on financial assets available for sale. But DBS points out that the company's key attraction for investors is its high proportion of business in the luxury market, where prices have risen sharply recently. DBS said that the supply of luxury housing projects is still scarce, there is a lot of room for appreciation. However, it added that the operation of the hotel business is still weak and shows no sign of improving.

DBS maintains its holding rating on the stock, with a target price of HK $4.33, a 55 per cent discount to estimated net asset value. DBS cut its earnings per share forecast for Dachang for fiscal year 10 by 14 per cent to HK $0.39 and its latest forecast for earnings per share for fiscal year 11 was HK $0.48.

Dachang closed up 3.0% at HK $4.45 on Thursday.