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DQC [MARKET PERFORM -5.6%] - Distractions to management weigh on operations - Update

We downgrade DQC from OUTPERFORM to MARKET PERFORM with a total return of -6%. We cut our TP by 31% as we trimmed our forecasts and geared our valuation more toward EV/EBITDA method instead of DCF to reflect the uncertainty of medium-term projections. An early Tet, stiff price competition and distractions from a state investigation of a former CEO, who is the current CEO’s sister, dragged down revenue 20% and NPAT 22% in Q1 2017.