UBS maintained its 01338-HK buy rating, lowering its target price to HK $3.40 from HK $4.00, after cutting its earnings forecast for the 2011-2012 fiscal year by 38 per cent by 70 per cent to reflect delays in new projects.

UBS said it expects sales of Bawang shampoo to decline even more in fiscal 2010. The bank said the worst-case scenario analysis showed that Bawang's business could last for another four years before running out of 1.6 billion yuan in cash.

UBS expects that the new packaging, to be launched in early May, may help Bawang regain the confidence of consumers and distributors. UBS expects the results due to be released on March 28 and the new packaging launched in May to be a positive catalyst for recent share prices.

Bawang Group rose 5.83% to HK $2.36.