The smartphone shipment forecast for fiscal year 15-17 will be raised by 2.0%, respectively, by 2.8% and 2.1%, respectively, as telecom operators reduce telecom service charges. The average selling price of smartphones will be affected as demand shifts to the lower end as consumer preferences change and market trends shift. We cut the average selling price of smartphones by 0.9%, 3.6% and 5.6% respectively for the 15-17 fiscal year.

The reduction in gross profit margin for fiscal year 15-17 by 0.5 percentage points / 0.7 percentage points / 0.9 percentage points respectively is due to higher components and manufacturing costs. We expect the gross profit margin for fiscal year 15-17 to be 11.7%, 11.3%, 11.1%, respectively.

Downgrade the company's investment rating to "sell" and lower the target price from HK $2.30 to HK $2.10. Due to the adjustment of smartphone shipments, average selling price and gross margin pre-forecast, earnings per share for fiscal year 15-17 are adjusted downwards by 4.5% and 15.7% per share. The new target price is equivalent to 16.4 times FY15 price-to-earnings ratio, 15.7 times FY16 P / E ratio, 15.0 times FY 17 P / E ratio and 2.4 times FY15 P / B ratio. We downgraded the company's investment rating to "sell".