STOCKWATCH - RCI Places 'Buy' Recommendation on Romanian Electronics Retailer Flamingo Under Review

RCI also said it kept under review its target price of 0.295 lei (0.09$/0.08 euro) on the stock.

"The company announced that it expects the fourth quarter to be below the fourth quarter of 2007, though volatility is high and predictions are difficult at the current moment,” RCI said in a statement.

"In addition, the management stated that several measures will be taken to face the expected downturn: the cash-flow will be the number one priority, the new openings will be carefully reviewed and in cases postponed, inventories will be closely watched and cost cutting will continue."

Retail revenues in the third quarter reached 104 million lei, 10% lower than RCI’s forecasts, hit by the new stricter consumer credit regulations issued by Romania’s central bank and worsening consumer sentiment. Wholesale revenues, however, reached 72 million lei, double compared to RCI's estimates, boosted by the delivery of a contract with fixed-line operator Romtelecom.

The company's third-quarter net loss stood at 8.5 million lei, 70% wider than expected, RCI added.

Flamingo International operates three store chains - household appliances chains Flanco and Flanco World, and IT and communications products stores Flamingo. It took over local household appliances chain Flanco for 38 million euro in 2006.

Last year, the company sold its Bulgarian, Serbian and Macedonian units and the Future Shop network of shops.

Shares in Flamingo International traded 7.2% down at 0.058 lei on the Bucharest Stock Exchange at 1111 GMT on Thursday.

(1 euro = 3.8419 Romanian lei)