From January to September 2009, the company achieved operating income of 1.924 billion yuan, down 37.9% from the same period last year; operating profit was 12.69 million yuan, down 24.4% from the same period last year; net profit belonging to the owner of the parent company was 10.41 million yuan, down 32.7% from the same period last year; and the basic EPS was 0.02 yuan. From July to September 2009, the operating income was 773 million yuan, down 26.9% from the same period last year; the operating profit was 3.49 million yuan, up 61.1% from the same period last year; the net profit belonging to the owner of the parent company was 3.65 million yuan, up 13.1% from the same period last year; and EPS was 0.01 yuan in a single quarter.
The sharp loss on investment income in the first three quarters of 2009 was the main reason for the decline in profits. The company's main business is the production and sales of copper poles, precision copper strips, special cables and other copper processing products. Affected by the 40 per cent year-on-year decline in copper prices during the reporting period, the company's comprehensive gross profit margin rose 4.6 percentage points year-on-year to 8.1 per cent, increasing the company's net profit after deducting non-recurring gains and losses by 244 per cent to 42 million yuan. However, due to the company's futures hedging losses and investment losses in Wuhu Hengchang Copper Company, the company's investment income in the reporting period was-32.78 million yuan (3.73 million yuan in the same period last year), which greatly swallowed up the company's profits.
The focus of the future is the asset integration of Feishang. The actual controller of the company, Shenzhen Feishang Group, has a complete copper industry chain, such as ore mining, refined copper smelting, copper deep processing, etc., as its assets, the company will have the expectation of asset integration in the future: 1) at present, Feishang Mining has basic proven copper metal reserves of 1.4 million tons and lead and zinc metal reserves of 4 million tons in Inner Mongolia, and has won the exploration right in Africa. 2) its smelting assets Feishang Copper and Hengxin Copper have a combined refining copper smelting capacity of about 200,000 tons / year, of which Hengxin Copper is the direct controller of Hengxin Copper Company; 3) the company is the only copper deep processing asset of Feishang Department. The current production capacity is about 100,000 tons / year. 4) the senior management of Feishang Department has repeatedly expressed the hope to use the company as a platform to integrate its copper assets in due course, so as to achieve the goal of making the company's copper business bigger and stronger, which investors can pay attention to in the future.
Profit forecast: the company is expected to achieve a net profit of 17.35 million yuan belonging to the owner of the parent company in 2009, giving the company a profit forecast of 0.04 yuan and 0.13 yuan in 2009 and 2010, respectively. According to the closing price of 7.03 yuan on October 28, the dynamic EPS E in 2009 and 2010 is 176times and 54 times respectively, maintaining the company's "neutral" investment rating.
Risk tips: 1) the risk of copper price fluctuation; 2) the uncertainty risk of future asset integration.
