Sound Global set for a comeback after depressing 4Q12 results

10% earnings growth has been penciled in.

According to DBS, earnings-wise, Sound Global Limited's 4Q12 was indeed disappointing due to higher borrowing costs. 

However, DBS noted that with a record Rmb3-4bn order backlog and an expanding BOT portfolio to generate higher recurring Operation & Maintenance (O&M) income, the company’s earnings should continue to grow, albeit at 10% and not 20-30% as in the past given today’s much bigger base.

More importantly, the industry’s outlook remains positive with more contract wins expected.

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As for management changes, we are neutral as long as Chairman Wen, who also owns 50% of the company, maintains his position and shareholding. We hope the appointment of an ex-manager from Sound Environment (000826 CH) as CEO will bring positive changes to operations and investor relations going by his track record at Sound Environment.