DBS downgraded 1868.HK from buy to sell, lowering its target price from HK $6.00 to HK $2.40 after the bank cut its earnings forecast for fiscal year 11 by 37 per cent and applied a lower target price-to-earnings ratio (from 15 to 10 times earnings).

Zhenmingli's net profit for fiscal 2010 fell 33.6 per cent from the previous year to HK $104.9 million. After falling this morning, the stock was valued at 29 times historical earnings.

DBS Weigao said that True Mingli's revenue and profit margins were lower than the bank's expectations; in particular, sales of LED general lighting equipment grew by 226%, while DBS forecast growth of more than 400%; DBS added that distribution and administrative expenses as a percentage of sales increased by more than 1 percentage point.

Mingli's shares fell 14.8 per cent to HK $3.27 after Friday's disappointing results for fiscal year 10.