Bank of America Merrill Lynch issued a report reiterating that 01338-HK outperformed the market, downgrading its 2011-2013 earnings forecast by 5%, 8% and 10%, and lowering its target price from 1.13 yuan to 1.05 yuan.

According to the report, it is believed that Bawang's most important asset, the Bawang brand, will be re-established in several years. Recent channel income, after the dioxane scandal in July 2010, Bawang / Zhufeng shampoo is still weak. Bawang's market share has been encroached on by leading players such as PlayG and Unilever, and there are few signs of recovery.

Bawang Group fell 4.0 per cent to HK $1.68.