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China's Computer Maker Giant Reports 75% Growth in Profits
China's computer giant Legend Holdings Ltd. on Monday reported a 75 percent rise in net profit to HK$480.88 million (US$61.81 million) in the year to March.
The Hong Kong-listed firm said it achieved sales of some 17.45 billion dollars, representing growth of 50 percent from a year earlier.
"Under the booming market environment, the group has achieved encouraging results with rapid growth in turnover, profit and market share," said Legend chairman Liu Chuanzhi in a statement in Hong Kong.
Liu said Legend continues to maintain its number one position in China with market share increasing from 14.4 perent in 1998 to 21.5 percent in 1999.
Analysts said the results were in line with market expectations but the stock was affected by generally poor sentiment towards technology stocks.
Legend lost 35 cents to close at 8.65 dollars, while the Hang Seng index was down 337.53 points to close at 14,140.73.
Thomas Deng, BNP-Prime Peregrine Securities analyst, said he does not expect Legend to outperform the overall market despite the company's sound fundamentals.
"It is too expensive," he said.
He added, however, that it is difficult to find a fair value for the stock, which could benefit significantly if the index rises.
Fundamentally, he believes that earnings growth continues to be driven by volume while profit margins remain steady.
The low penetration of personal computers in China continues to present the company with huge growth potential, especially after China enters the World Trade Organization, he said.
"I am not too worried about foreign competition, because the company has proved itself. Five years ago, China's PC market was dominated by foreign brands, but now these foreign brands are far behind Legend in terms of market share in China," Deng said.
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