JP Morgan has an 'underweight' recommendation on Giordano International, citing disappointing revenue growth trends for the third quarter.
Sales in the Hong Kong retail network are believed to have expanded in the single digits, while sales in China and Taiwan are believed to have shrunk for the quarter when compared with the same period a year ago. Rising rental pressures also are expected to continue and may even get worse next year.
The broker said it was less optimistic after discussions with management that focused on sales and gross margin trends - two of the positive aspects of the company's story in recent quarters. JP Morgan has cut its second half revenue estimates for the retailer by 5.5 per cent. Using a discounted cash flow the broker has set a 12-month price target on the share of $4.60.
The share closed Friday at $4.50.
