Daiwa maintained that Wuyi Pharmaceutical (1889.HK) was weaker than the market rating, with a target price of HK$0.71; the reason was short-term uncertainty and lack of favorable catalysts. The bank expects net profit for mid-2009 to drop 53.1% from the same period last year to RMB 63.9 million due to declining sales and rising expenses. Previously, the company issued an interim earnings warning, and net profit is expected to decline in the first half of the year. According to Daiwa, it is appropriate to keep an eye on the increase in sales of the company's new product, the perilla oil capsule, as its growth potential can be seen.

Wuyi Pharmaceutical rose 1.2% to HK$0.84 yesterday.