From January to September 2009, the company achieved operating income of 497 million yuan, a year-on-year decrease of 41.2%; operating profit of 41.86 million yuan, profit of 14.63 million yuan in the same period last year; net profit attributable to owners of the parent company - 49.39 million yuan, profit of 3.51 million yuan in the same period last year; basic earnings per share of -0.205 yuan.
In July-September 2009, the company achieved operating income of 164 million yuan, a year-on-year decrease of 47.6%; operating profit - 18.43 million yuan, profit of 6.44 million yuan in the same period last year; net profit attributable to parent company owners - 2010 million yuan, profit of 2.22 million yuan for the same period last year; basic earnings per share - 0.083 yuan.
Production output was reduced and unit production costs rose as a result of discontinuation of production, maintenance and technological transformation. In particular, gross margin was lost in the third quarter. The company's main business is the production and sale of acrylamide and urea. In the first quarter, the company's subsidiary Jiangnan branch and holding subsidiaries stopped production and overhauls on production equipment. The maintenance period was long. In the fourth quarter, the company carried out a comprehensive technological transformation project on the material structure adjustment and energy saving and emission reduction project of the Jiangnan branch's synthetic ammonia and urea system, which led to a large decline in production and sales of the company's main products such as urea, methanol, hydrogen peroxide, etc., which led to a decline in unit production costs, gross margin, and sales prices of the main products urea, acrylamide, hydrogen peroxide, etc., falling compared to the same period last year.
Future profit growth depends on acrylamide capacity expansion projects. The company's main products include 65,000 tons/year of acrylamide, 170,000 tons of urea, 50,000 tons of methanol, 25,000 tons of hydrogen peroxide, 15,000 tons of white carbon black and plastic products. Currently, the company's main source of profit is acrylamide products. Since the company uses a microbiological method to prepare acrylamide, the tonne consumption of proconitrile as a raw material is only 0.77 tons, which has a certain cost advantage over other methods. Currently, the company is expanding acrylamide production capacity, and the new plant (25,000 tons) is expected to be put into operation in the second half of 2009. The company's profit growth in 2010 was mainly due to an increase in acrylamide production and sales.
Profit forecast and investment rating: We gave the company earnings per share from 2009 to 2010 of -0.27 yuan and 0.05 yuan respectively, and the latest closing price was 8.49 yuan, maintaining the company's neutral investment rating.
Risk warning: affected by demand, acrylamide prices fell sharply; special export tariffs on urea products continued for a long time
