Shares in Hong Kong-based sourcing giant Li & Fung plunged almost 20 percent on Friday after the Wal-Mart supplier reported an unexpected drop in core operating profit, analysts said.
The firm tumbled 19.27 percent to HK$12.90 after it reported Thursday that core operating profit fell 22 percent to $221 million in the first half, due partly to shrinking margins in its US distribution business.
First-half net profit rose 33 percent to $312 million, boosted by a write-back for two earlier acquisitions, while revenue rose four percent to $9.13 billion.
The company sources products for US retailers like Wal-Mart Stores, Abercrombie & Fitch Co. and Kohl's Corp.
Credit Suisse said the results "came in as a huge disappointment".
"We see no signs of major improvement in the near term and very remote chance that Li & Fung's three-year target can be achieved," it said.
JPMorgan said it expected the stock price to "gradually recover as we move into better earnings growth" in the second half of the year.
The company said its core operating profit was "relatively weak" but assured investors it was "very focused on taking the necessary steps to improve the second half results".
-- Dow Jones Newswires contributed to this story --
Source: http://news.yahoo.com/li-fung-shares-plunge-hong-kong-earnings-shock-181043005--finance.html
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