NVC Lighting disputes 'may hurt' earnings
Ongoing disagreements with former chairman Wu Changjiang could hit the HK-listed company's second-half results, analysts say
NVC Lighting's disputes with its former chairman Wu Changjiang may have a limited impact on the Hong Kong-listed firm's first-half results, but could prove costly in the second half.
Headquartered in Huizhou city, Guangdong province, NVC is the largest contract manufacturer of lighting in China, according to a JPMorgan report.
"The first-half results will not be very good," said Miles Xie Jianying, an analyst with Bocom International - the investment banking and securities unit of the Bank of Communications. "But the impact of Wu's resignation on NVC's results in the first half will be limited because he resigned in late May."
Wu, who founded NVC in 2006, resigned as chairman and CEO on May 24. On August 14, NVC warned of a large drop in profit for the first half due to increased production costs, a decrease in demand and sales, and Wu's resignation.
But Kim Eng Securities' analyst Alex Yeung said he did not believe NVC would report a big loss in the first half.
However, Wu could induce NVC's suppliers and distributors to stop doing business with the company because of his strong ties with them, Yeung warned. "This should impact earnings [in the second half] a lot."