Titan's revenue in the first half of 11 rose 2.8 per cent year-on-year to 101 million yuan, while net profit rose 6.69 per cent to 9.3 million yuan, or 0.0112 yuan per share. The company's first-half performance was lower than we expected. The main reasons for the lower than expected are: 1) revenue growth is slower than expected; 2) sales and administrative expenses increase faster than expected; 3) losses of affiliated companies; 4) higher than expected effective tax rate.

Lower the company's operating income forecast for 11-13 years. Due to 1) the increase in competition caused by the State Grid's focus on bidding for DC power products; 2) the local financing platform has a negative impact on the sales of electric vehicle charging stations for local development; 3) the high-speed rail accident has a negative impact on the sales of PASS (mainly used in the railway system). We reduced the company's revenue for 11-13 years by 20.4%, 11.3% and 7.2%, respectively.

Downgrade 11-13 earnings forecast, downgrade to "collection". Due to 1) lower-than-expected first-half results, 2) increased competition in the power DC product market, and 3) negative factors of car charging and PASS products, we reduced the company's profit for 11-13 years by 22%, 16% and 12%, respectively. We accordingly lowered our target price to HK $1.15 (original target price of HK $1.70), which is equivalent to 10 times 11-year price-to-earnings ratio and 8.01 times 12-year price-earnings ratio. Downgrade investment rating to "collection".