According to the 2010 semi-annual report released on the evening of Aug. 25, the company achieved an operating income of 1.8451128 billion yuan in the first half of the year, an increase of 15.49 percent over last year. The net profit attributed to the parent company was-333.3169 million yuan, compared with 71.9874 million yuan in the same period last year. The EPS for the first half of 2010 is-0.3219 yuan.
Comments:
Get rid of the baggage and travel light. The company's performance was significantly lower than expected, mainly due to the company's provision for a substantial impairment of 333.6 million yuan, of which the bad debt loss of receivables was 22.4308 million yuan and the inventory price loss was 311.2 million yuan. If the impairment reserve factor is excluded, the company will break even in the first half of the year. We infer that the impairment reserve of the company has fully reflected the pessimistic expectation of the later price, the risk of further deterioration has been fully released, and the probability of the company doing better in the future will be significantly greater than that of the worse.
The metals business continues to pick up and the chemical business still waits for time. From January to June, the company produced 97500 tons of zinc ingots, with an estimated capacity utilization rate of more than 90%. The gross profit margins of mining and metallurgy reached 52.6% and 26.41%, respectively, an increase of 12.7% and 7.4% over the same period last year. In the first half of the year, the company produced 169700 tons of monoammonium phosphate, with an estimated capacity utilization rate of 70%, but the chemical business as a whole has not fully recovered, with the gross profit margin falling 1.89 percentage points from the same period last year to 13.28%.
The cost control during the period needs to be strengthened. The company's financial expense rate and sales expense rate in the first half of the year decreased by 0.6% and 0.25% respectively compared with the same period last year, but management expenses increased by 1.6% year-on-year to 11.6%.
Resource revaluation provides a clear margin of safety. Lanping lead-Zinc Mine is the largest lead-zinc mine in Asia. if its lead and zinc metal reserves are estimated on the basis of conservative 244 and 11.82 million tons respectively, the total value of lead and zinc resources is about 38.8 billion yuan, then the company's equity resource value is 23.2 billion yuan, while the company's total market capitalization is about 13 billion yuan. the resource value / market capitalization is 1.78 times, the current stock price has an obvious margin of safety.
Under the assumption that the zinc price in 2010-12 is 15000 yuan, 16000 yuan and 17000 yuan per ton, we adjust the profit forecast of the company to-0.22,0.29,0.70 yuan in 2010-12, respectively. The company's main business operation is sound, the stock price has a margin of safety, and once the conditions are ripe, the resumption of asset restructuring is expected to start again. We maintain the "overweight" rating.
Risk hint: zinc price falls, phosphorus chemical industry remains depressed.