Chaowei announced that net profit for the first half of 2013 fell 32.9% year-on-year to $216.2 million. Since Chaowei announced Ying Police as early as June 13, although its performance was poor, it was within market expectations.

We expect that after three price increases in July, the Group's gross margin will improve in the second half of this year. However, in the fourth quarter after the peak season ends, we expect prices to drop.

The debt ratio continues to rise. At the end of June this year, the net debt ratio rose to 73.6% from 53.6% at the end of last year and 60.3% at the end of June last year.

Maintain the buying rating and set a target price of HK$4.52 based on a price-earnings ratio of 7.0 times the 2013 forecast