China stock market

Foreign investors’ favourite Hangzhou Robam shares slump as profit falls

The kitchen appliance maker reported fourth-quarter profit down 3 per cent from a year earlier

PUBLISHED : Tuesday, 27 February, 2018, 12:35pm
UPDATED : Tuesday, 27 February, 2018, 4:12pm

Hangzhou Robam Appliances, whose shares are held by major foreign investors including UBS and BNP Paribas, tumbled by the 10 per cent daily limit in Shenzhen after the maker of kitchen devices posted its first quarterly profit decline since 2012.

The stock price plunged 5.02 yuan to 45.19 yuan at the close on Tuesday, with trading volumes about a third below the 30-day average. The company, which makes kitchen appliances ranging from ventilators to gas stoves, posted fourth-quarter profit of 490 million yuan for 2017, a 3.1 per cent drop from the 505 million yuan (US$80 million) recorded a year earlier. Full-year profit increased 20 per cent, the slowest pace since Hangzhou Robam’s listing in 2010, according to a preliminary earnings statement.

Government policies aimed at cooling property prices in first- and second-tier cities, and rising raw-materials costs had crimped the company’s profits, according to Liu Chidao and Ma Wangjie, analysts at Shenwan Hongyuan Group. Hangzhou Robam relied on China’s big cities for about 65 per cent of its sales, according to the brokerage’s estimates.

Hangzhou Robam was one of the growth companies favoured by overseas investors, as its annual profit increases had never fallen below 35 per cent since it went public, riding on a boom on China’s property market.

As of the end of September, foreign investors held a combined 26.5 million shares, 6.3 per cent of the company, according to Robam’s quarterly report. UBS and BNP had 1.8 per cent and 1.3 per cent stakes in the company respectively, as the third- and seventh-largest shareholders.

The stock jumped 70 per cent last year, a sixth consecutive annual gain. The only annual drop for the company took place in 2011, when the stock fell 31 per cent.

Hangzhou Robam said in a separate statement that earnings this quarter may rise between 10 per cent and 30 per cent from a year ago. Shenwan Hongyuan predicts the company’s revenue growth may stay at around 20 per cent, maintaining a “buy” rating on the stock.

Its main rival Zhejiang Meida Industrial slid as much as 4.2 per cent during Tuesday’s session before finishing the day unchanged at 16.80 yuan in Shenzhen.