DBS reduced the target price of AEON (0984.HK) to HK$12.77 (equivalent to 8 times the predicted price-earnings ratio for fiscal year 10, excluding cash). The original target price was HK$13.00. DBS raised AEON's rating from fully reflecting the valuation to holding. Since the company issued a profit warning on August 3, the stock price has declined (already 13.7% lower). Currently, the valuation has declined. The current price is equivalent to the predicted price-earnings ratio of about 14 times in FY10. However, DBS lowered AEON's profit forecast for FY09 by 16% and FY10 by 6% to reflect factors that have declined in gross profit margins and startup losses for many newly opened stores.

AEON fell 1.56% yesterday to close at HK$12.60.