ICBC International kept the purchase rating of Meike International (0953.HK) unchanged, but the target price dropped from HK$1.2 to HK$1 (equivalent to 5.1 times the price-earnings ratio for fiscal year 12); indicating that Meike took the initiative to deal with the current severe business environment, including lowering the order fulfillment rate for the 3rd to 4th quarter of 2011 and lowering the number of store growth targets for the past two years. Management also emphasized that it did not buy back inventory from dealers.

The bank cut earnings estimates for 11-13 by 9%-23% to reflect Mick's lowering of its new store growth target and order amount growth target, but maintained its target of 48% year-on-year profit growth in fiscal year 11. It indicates that although Mick's working capital turnover deteriorated, the 40% target payout rate remained unchanged, and the expected dividend rate was over 8%.

The US dollar closed at HK$0.84 yesterday.