3Q08 results – Net profit decreased 13.3% to HK$7.3m in 3Q08

~ Revenue increased 12.4% to HK$100.2m in 3Q08 on the back of a steady 7% growth in Hong Kong market as well as a 62% growth in PRC.
~ Gross profit margin shed 3.9ppt to 33.5% in 3Q08 but increased 1.0ppt from 32.5% in 2Q08, due to the continuous high raw material costs.
~ Operating expenses increased 12.0% due to increase in marketing and distribution costs to support sales growth, as well as administrative and other related overheads in view of inflationary effects.

Hedging and trading activities resulted in realised gain of HK$0.8m in 3Q08 where management took up long position in futures contracts to hedge against the Group’s future coffee requirement. Prices of coffee beans have fallen sharply in Oct 08.

Maintain Sell with target price adjusted to S$0.145