Dahua Jixian said that 0809.HK 's 2008 results fell short of expectations, cutting its earnings per share forecast for fiscal year 09-10 by 27 per cent, due to falling product prices, adding that the financial situation further deteriorated, with net debt surging 45 per cent from the previous year to HK $4.03 billion and interest coverage reduced from 5.1x to 3.0x.

The bank maintained its Dacheng biochemical sell rating, lowering its target price from HK $2.10 to HK $0.65 and reducing its price-to-earnings ratio to just three times its 10-fiscal year, in line with its domestic counterparts. The reason for being bearish on the stock is: poor financial position, inability to pass on costs in the face of fierce competition, and upward pressure on corn prices.

As the company's 2008 net profit fell 34.1 per cent from a year earlier to HK $621.8 million, some investors may be disappointed that the company halved its final dividend to HK $0.01 per share. Dacheng biochemical fell 3.50 per cent to HK $1.38 yesterday.