According to the quarterly report of 2009, the company's operating income from January to September was 140 million yuan, down 24.06% from the same period last year; operating profit was-39.08 million yuan, down 167.79% from the same period last year; net profit belonging to the parent company was-34.52 million yuan, down 161.38% from the same period last year; and diluted earnings per share was-0.23 yuan.
Review of the company's operating results in the first three quarters: the company is mainly engaged in wood processing and the manufacture and sale of forest chemical products; during the reporting period, due to the downturn in downstream demand, the company's operating income decreased by 24.06% compared with the same period last year; as the decline in product prices was much greater than that of raw materials, the company's comprehensive gross profit margin fell 13.61 percentage points to-2.22%. The substantial increase in management expenses led to a period expense rate of 26.70%, an increase of 6.28 percentage points compared with the same period last year, and negative factors such as the decline in revenue, the negative gross profit margin, the increase in period expense rate, and no contribution to investment income, resulting in substantial losses in the company's operating profit and net profit belonging to the parent company.
The company's main business deteriorated further: the company's comprehensive gross profit margin from 2005 to 2008 was 19.65%, 9.08%, 0.66% and 6.99%, and the expense rate for the corresponding period was 22.88%, 18.37%, 33.35% and 25.19%. From the comparison of the two data, we can see that the company's gross profit margin is lower than the expense rate. In the first three quarters of this year, the company's gross profit margin fell further to-2.22%, while the expense rate rose to 26.70%. The gross profit margin turned negative, indicating that the company's main business is facing further deterioration.
A large amount of investment income drives the company to achieve profits from 2007 to 2008: the company's investment income in 2007 and 2008 was 113.11 million yuan and 64.19 million yuan respectively, after deducting a large amount of investment income; due to the company's no investment income contribution in the first three quarters of this year (the same period last year through the transfer of 12% of the equity of Beijing Junhe Centennial Real Estate Development Co., Ltd.), the company suffered a large loss.
Profit forecast and investment rating: due to the poor profitability of the company's main business, it is difficult to obtain sustainable profits through the main business, so we do not make a profit forecast for the company; at the same time, we do not give the company a corresponding investment rating.
Risk hints: (1) the risk of sustained losses in the company's main business; (2) systemic risk in the capital market.