GOME Electrical Appliances Holding (0493)

[D123]

PROFIT WARNING ANNOUNCEMENT

"The board of directors (the “Board”) of the Company wishes to inform the shareholders of the Company (the “Shareholders”) and potential investors that based on a preliminary review of the unaudited consolidated management accounts of the Group, the Group expects to record a significant decline in its net profit for the three months ended 31 March 2012, as compared to the corresponding period ended 31 March 2011. Such decline is primarily due to a drop in the Group’s sales revenue and loss attributable to the Group’s e-commerce business."

Full announcement here: http://www.hkexnews.hk/listedco/listcone...430243.pdf

GOME is interesting as it has been widely touted in the past to be a good proxy to the Chinese consumer's spending habits, and also as a lagging indicator to the housing sector. That, and that their share price has been in a free fall recently . They are also the second largest retailer of electrical white goods after Suning Appliance, which is listed on the Shenzhen exchange. The latest announcement from GOME comes soon after Suning reported a drop of 15% in net profit for 1Q 2012.

Forbes report on Suning: http://www.forbes.com/sites/russellflann...sappoints/

Unlike Suning however, GOME is reporting a drop in revenue as well as net profits. Seems like competition is heating up in the Chinese electronics sector, and consumption levels are not rising enough to compensate for the shakeout in the industry.

C'mon Chinese consumer! You are supposed to come to the world's rescue...

[freedom]

e-commerce like taobao is killing both Suning and Gome, just like Amazon is kinda killing Best Buy in certain way.

[D123]

PROFT WARNING ANNOUNCEMENT

"The board of directors (the “Board”) of the Company wishes to inform the shareholders of the Company (the “Shareholders”) and potential investors that based on a preliminary review of the unaudited consolidated management accounts of the Group, the Group expects to record a net loss for the six months ended 30 June 2012, which is primarily due to a drop in the Group’s sales revenue and loss attributable to the Group’s e-commerce business."

Full announcement here: http://www.hkexnews.hk/listedco/listcone...724149.pdf

GOME's poor financial performance continues, with the company now slipping into a net loss for the first six months of the year. The price war continues among the big box retailers in China in both the online and offline spaces. Since Taobao and 360buy.com (the two main online retailers in China and competitors to traditional retailers like Suning and GOME) are not listed entities, it is hard to say how they are faring, but suffice to say, even Alibaba.com, the parent of Taobao reported lower profits and margins for 1Q 2012. Let's wait and see the financial reports of Suning and perhaps, any press releases from Taobao and 360buy.com, the latter who is rumored to be ramping up publicity as part of plans to seek a public listing soon.

If all the big-box and online retailers are reporting lower revenues, then it would be worrying for those counting on Chinese consumer spending to spur growth in China.

[D123]

PROFT WARNING ANNOUNCEMENT

"The board of directors (the “Board”) of the Company wishes to inform the shareholders of the Company (the “Shareholders”) and potential investors that based on a preliminary review of the unaudited consolidated management accounts of the Group, the Group expects to record a net loss within the range of approximately RMB600 million and RMB700 million for the nine months ended 30 September 2012, in which the unaudited interim result for the six months ended 30 June 2012 recorded a net loss of RMB501 million and the third quarter result for the three months ended 30 September 2012 would be expected to record a net loss within the range of approximately RMB100 million and RMB200 million."

Full announcement here: http://www.hkexnews.hk/listedco/listcone...022297.pdf

GOME is still losing money. This is following a 2Q where both GOME and Suning experienced top line decreases. Alibaba.com Limited was privatized in June this year so that's one less public source for an indicator of the Chinese consumption levels and trends. Hmm... seems like things are still not very rosy in China.

[soros]

Gome closed all its branches in Hong Kong just days before the lunar new year.