The net profit of CITIC 1616 Group (1883 HK) in the first half of the year increased 1.3% over the same period last year to HK$180 million. According to DBS, the company's revenue and profit for the first half of the year fell short of the bank's expectations due to a decrease in voice service volume and a slowdown in non-voice business growth. Considering the weak growth in business volume, DBS lowered the company's revenue forecast for the 2010 and 2011 fiscal years by 8.0%-9.0% and the profit forecast by 7.0%-8.0%.

DBS lowered the target price of the stock from HK$3.30 to HK$2.90; however, it maintained the purchase rating because the stock was not highly valued, which is equivalent to 7.9 times the price-earnings ratio for fiscal year 2011. At the same time, the dividend yield for fiscal year 2011 is expected to reach 6.3%; it is expected that the stock's important catalyst will be future mergers and acquisitions.

CITIC 1616 fell 3.70% yesterday to close at HK$2.08.