Morgan Stanley published a report saying that Bawang's sales are recovering rapidly, but it is currently buying too early, so it maintains a “reduced holdings” rating. The target price is 3.5 yuan to reflect the expected asset value of 67.9 yuan per share, which is 30% off. According to the Morgan Stanley report, sales of Bawang products in August fell 15 to 30% year on year, but there was a clear improvement from the 30-70% decline in July, while September to early October is believed to be a critical time for product sales because it is a traditional period of high consumption in the mainland. At the same time, Bawang has also strengthened product promotion, but it is believed that Bawang products will take time to respond. Damo added that it is expected that false product publicity will have little impact on the company, while management expects the company's overall sales to respond within 3 to 6 months. The bank also pointed out that although Bawang's brand pursuit was not greatly affected by the dioxane incident, dealers said that overall poor sales in the industry and fierce competition in the industry as a whole were cautious about Bawang's prospects. In view of this, Morgan Stanley expects Bawang's net profit for 2010 and 2011 to be 331 million and 397 million yuan (RMB, same below), with earnings per share of $0.11 and $0.15; the expected return on equity is 16.3% and 19.4%, respectively. The stock fell 4.24% yesterday to close at HK$3.39.