Dao Heng Securities has revised down by 16.5 per cent its full-year earnings forecast for Convenience Retail Asia (CRA) because of weak retail sentiment. The brokerage house predicted CRA, operator of Circle K in Hong Kong, would post a net profit of HK$69.8 million for the year to December 31. Last week, Growth Enterprise Market-listed CRA announced its interim profit rose 60.1 per cent to HK$29.3 million in the six months to June 30. Although the result beat market expectations by 8 per cent, Dao Heng said it was 5 per cent below its forecast because of the lower-than-expected store sales in late May and June. It expected substantial earnings contribution from mainland operations to be made in 2004. Dao Heng said the operating margin declined slightly to 22 per cent in the first half from 22.1 per cent previously after the implementation of the Mandatory Provident Fund scheme. It expects more operating expenses to be incurred in the second half. SG Securities has forecast CRA to report an annual profit of HK$61.3 million, up from its original prediction of HK$58.6 million. It expects CRA's full-year sales to grow 20 per cent to HK$1.37 billion, with another six stores to be opened in the second half. For the full year, SG projected a net profit margin of 4.5 per cent from 4.2 per cent a year ago. It believed this should be achievable given improved operating efficiency and incentive rebates with suppliers.