Events:
The company released three quarterly reports on October 23, 2010. In the first three quarters, the company achieved 1588.84 million yuan, up 47% from the same period last year; the net profit attributed to the owner of the parent company was 56.1 million yuan, up 2623% from the same period last year. Realize earnings per share of 0.14 yuan. The growth rate of the company's performance in the third quarter decreased compared with the same period last year, with operating income rising 49.6% in a single quarter, and net profit belonging to the owner of the parent company fell 16.5%.
The volume and price of the main products increased, the gross profit margin of the products increased in the third quarter compared with the previous quarter, and the production capacity of hydrogen peroxide will reach 300000 tons next year.
The company's operating income increased significantly in the third quarter of 2010 due to the good market demand for major products such as urea, concentrated nitric acid, ammonium nitrate and hydrogen peroxide, as well as rising prices. Benefiting from the increase in product prices, the company's comprehensive gross profit margin for products in the third quarter was 20.07%, compared with 16.62% in the second quarter. The company's hydrogen peroxide production increased by 70% in the first half of the year compared with the same period last year, while Shengqiang's net profit was 24.98 million yuan, accounting for 53% of the combined net profit, making a considerable contribution. The hydrogen peroxide aquaculture capacity of Shengqiang Chemical Industry was raised to 300000 tons by the end of 2010 after technical transformation, with a gross profit margin of more than 30%. It is expected that the contribution of EPS to the company will be about 0.14 yuan in 2010.
Coal mine can be put into production in 2011 to strengthen coal self-sufficiency rate.
The company acquired Xinyi Coal Mine in 2008, the annual production capacity of No. 1 well is 300000 tons, is currently applying for a safety license, and is expected to be put into production in 2011. Aozichong Coal Mine is undergoing acceptance after technical transformation and is expected to be put into production in 2011. To sum up, we estimate that the company will be able to support 200000 tons of coal mines in 2011. With the continuous commissioning of the three wellheads of Xinyi Coal Mine, the company will add the self-sufficiency rate of coal to form the advantage of the industrial chain.
The integration of Zhongcheng Chemical Industry will take some time.
The main products of Zhongcheng Chemical Industry are synthetic ammonia, hydrogen peroxide and urea. It is expected that its business will form a competitive relationship with the company after it is acquired by the Group in the future. It is expected that there is a greater possibility of integration, but it will take time.
The CDM project is expected to be confirmed in 2011
The company's CDM project has been registered with the United Nations and is currently working well. Revenue is expected to be confirmed in 2011, when it is expected to contribute 20 million yuan to the company's net profit.
We predict that the EPS of the company from 2010 to 2012 is 0.22,0.49,0.61 yuan respectively, corresponding to the company's closing price of 11.99yuan on October 22nd, 2010, and the dynamic price-to-earnings ratio is 54 times, 24 times and 20 times respectively. Give "overweight" investment rating.