LONDON (Alliance News) - Chinese healthcare sector investor Cathay International Holdings PLC said its results will miss market expectations for the full year due to higher-than-anticipated operating expenses.
While revenue and gross profit both will be broadly in line with market forecasts, albeit weaker than the company had expected, operating expenses are expected to be significantly higher due to additional spending on marketing of existing and new product ranges.
As a result of this, the group expects to post a material pretax loss for the year to the end of December, "markedly" below market expectations, it said.
Cathay said the Chinese market has remained difficult, amid the well-documented slowdown in economic growth in the country, and it has been launching new products in order to cope with the issues. These new products are showing good initial progress, Cathay said, though not enough to compensate for the revenue and margin pressures the group is facing.
Beyond this, Cathay also said its Lansen Pharmaceutical Holdings joint venture, of which it owns slightly more than half, has reported an investigation conducted by Chinese authorities has found a number of batches of gingko produced by Lansen's Ningbo Liwah subsidiary failed to meet national standards.
Ningbo Liwah has been fined around USD2.7 million for the breach, though Cathay said this should only have a minimal impact on Lansen.
Cathay shares were down 18% on Tuesday following the announcement at 13.50 pence, a new 52-week low.
By Sam Unsted; samunsted@alliancenews.com; @SamUAtAlliance
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