Yucheng Technologies Ltd., which provides computer support to the Chinese banking industry, should benefit from the approaching Olympics, said a Roth Capital Partners analyst on Monday, raising his revenue estimates.
Kun Tao said in a note to investors that top-tier banks in Beijing are "sharply increasing their spending" in systems infrastructure such as call centers, hardware for new branches and machine upgrades, to improve their banking services during the Olympics.
"As one of the leading systems integrators, YTEC is capturing the high growth opportunity under the current market circumstance, according to management," the analyst wrote. He added that he expects Yucheng will have "robust revenue growth from the systems integration sector."
Tao rates the stock "Buy." He raised his second-quarter sales forecast by $8.5 million to $24.5 million but lowered his gross margin forecast to 29 percent from 37.5 percent to reflect higher sales expectation from the systems integration sector, which has a lower margin than the company's information technology services business.
Beijing-based Yucheng's shares fell 37 cents, or 3.2 percent, to $11.32 in afternoon trading. In the past 52 weeks, the stock has traded between $7.15 and $19.36.
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