Pou Sheng &Yue Yuen:1Q17first take

Pou Sheng missed while Yue Yuen beat

    Pou Sheng’s 1Q17operating profit missed DBe by 33% due to higher OPEX.We were surprised by

    (1) the net store closures for the directly operatednetwork during 1Q17and

    (2) 7% QoQ increase in OPEX, which deviates fromseasonal trends. Yue Yuen’s operating profit was 4% higher than DBe, thanksto continued ODM efficiency. On top of operating profit, stronger investmentincome and reduced minority drove net profit 23% ahead of DBe. We willfollow up with more details after an earnings call on May 15morning HKT.