Credit Suisse maintained its 02038.HK neutral rating and lowered its target price to 3.10 yuan from 3.50 yuan.

Credit Suisse published a research report, pointing out that Fuzhikang's revenue and net profit in the first half of the year are expected to be no more than US $2.5 billion and US $1000-20 million respectively, which is far lower than the bank's expectations. the company refers to the decline in gross profit and other income mainly due to reduced demand from major customers.

The bank pointed out that the expected difficulties in the business led to a decline in net profit in the first half of the year, but the situation was more difficult than originally estimated. However, while the news is expected to trigger a share price correction, the current dividend return of 6.9 per cent and sitting on a lot of cash can be supported.

The bank also pointed out that the launch of new smartphones and the strategy and imminent elimination of the Indian market are potential positive catalysts, but short-term profit pressure will also affect stock price performance. The bank cut its earnings per share forecast for 2016-18 by 56-62 per cent.