Morgan Stanley maintains the downgrading of 1338.HK, with a target price of HK $2.10.

Morgan Stanley said that as the recovery in sales of its core Bawang and Chufeng brands, which accounted for 90 per cent of the group's total sales in 2010, appeared to be weak, the bank felt it would take longer for consumer confidence to recover. Bawang can regain market share from other brands. Although Bawang has a good balance sheet and is a recovery concept stock, Morgan Stanley prefers to wait and see until earnings are more predictable or there are signs of sales stabilizing.

Bawang fell 0.42 per cent to HK $2.39 yesterday.