Citigroup reported that 02369.HK 's smartphone shipments were disappointing in the first half of the year and were expected to remain weak in the second half of the year, falling short of market expectations, describing its operations as still at risk (out of the woods). The bank downgraded its earnings per share from 2016 to 2017 to $0.09 and $0.10 respectively, lowering its target price from $0.87 to $0.76, which represents a composite price-to-earnings ratio of 8.9 times and maintains a "sell" rating.

The bank said that Coolpad's smartphone shipments were cut by 17% and 27% respectively in 2015 and 2016 to 34.6 million and 36 million respectively. Shipments in the second half of this year are expected to fall 10% to 17.5 million units year-on-year, up 2% from the first half of this year. It is believed that demand is still challenging, mainly because the sales channels of telecom companies are still weak, so the group needs to speed up the expansion of other traditional and online sales channels.

In addition, the bank said the short-term synergy between the group and Letv was limited. The bank is concerned that under the current business model, its online brands and traditional brands operate separately and benefit less from economies of scale.