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DQC - Steep margin contraction, sales decline hurt profits - Earnings Flash

DQC’s operating profit slid 49% in H1 2017 vs H1 2016 caused by a 7% decrease in revenue and a substantial margin contraction due to a 5%-7% ASP decline and rising SG&A expenses. Reported NPAT-MI dropped faster at 53% as there was no Cuba-related income in H1 2017. H1 2017 operating profit trailed our expectation, as such, we will likely reduce our TP in our next update.