(Yicai Global) Oct. 15 -- The share price of Dong-E-E-Jiao rose after China's largest donkey-hide gelatin producer said that its third-quarter financial results are likely to be bad, prompting investors to go bargain-hunting amid hopes of bottoming out.

Dong-E-E-Jiao's [SHE:000423] stock price rose by 4.9 percent to CNY32.65 (USD4.60) by noon, with a market capitalization of CNY21.4 billion (USD3 billion). Since late April, the share price has been trimmed by 35 percent.

Dong-E-E-Jiao expects its net profit to fall by a point between 82 percent and 99 percent from a previous year to somewhere between CNY3 million and CNY64 million (USD424,140-USD9 million) during the three months, the Shandong province-based firm said in a statement yesterday. 

The pace of decline was growing. In the first half, Dong-E-E-Jiao's earnings showed a 78 percent net profit drop from a previous year to CNY193 million (USD27.3 million).

The Chinese elderly used to prefer giving donkey-hide gelatin as a gift to others but the consumption habits of younger generations are changing, an analyst who wished to remain anonymous told Yicai Global. 

Amid shifting consumer trends, the product has also become expensive. The retail price of Dong-E-E-Jiao's donkey-hide gelatin rose to CNY6,000 (USD848.40) per kilogram last year, nearly 40 times the price in 2006. Before this year, the company's net profits tracked the change by growing at an average annual growth rate of 20 percent for 12 consecutive years.

Founded in 1952, Dong-E-E-Jiao is one of the few players in China's market for donkey-hide gelatin, presumed to have health benefits. 

Editor: Dou Shicong