From January to December 2010, the company achieved operating income of 2.292 billion yuan, an increase of 26.59% over the same period last year; operating profit of 182 million yuan, an increase of 11.31% over the same period last year; net profit of 101 million yuan belonging to the owner of the parent company, a decrease of 2.76% over the same period last year; and basic earnings per share of 0.35 yuan. The company's distribution plan is 1.26 yuan (including tax) for every 10 shares.
The company's operating income has increased significantly, but its net profit has declined slightly. The company is mainly engaged in the manufacture of automobile and motorcycle parts as well as aviation parts. Benefiting from the substantial increase in China's automobile production and sales, the company's auto parts production and sales increased by 29.5% in 2010 compared with the same period last year, which is basically in line with our expectations. The company's auto parts revenue accounted for 89.33%, and its good growth momentum also enabled the company's operating income to grow by 26.59% compared with the same period last year. However, due to a large decrease in investment income and non-operating income compared with the same period last year, the company's net profit declined slightly. Earnings per share are lower than we expected. According to the general forecast of the market, the annual compound growth rate of China's automobile industry is expected to remain between 10% and 15%, and the growth rate of the auto parts industry will exceed that of the whole vehicle, so we expect the company's auto parts revenue to maintain a growth rate of more than 15%. The company's revenue and performance will also achieve steady growth.
Revenue from aviation spare parts business has stopped falling and rebounded, and assets are still expected to be injected. Revenue from aviation products, another major business of the company, began to reverse the downward trend in the second half of the year, growing 14.66% year-on-year, and gross profit margin increased 3.64% year-on-year to 39.37%, basically getting rid of the decline after the outbreak of the global financial crisis. However, the company's aviation products currently account for only 6.98% of revenue and 11.82% of gross profit, which makes no obvious contribution to the company's performance. With the advent of opportunities for the development of China's navigation industry, the company's aviation products will have a broad space for development. It is expected that the revenue of aviation products will enter a period of rapid growth and become another major performance contribution point of the company.
As one of the main listing platforms of AVIC Tongfei, it is still possible to inject assets related to general aviation manufacturing in order to expand the revenue share of aviation products.
During this period, the expense rate is well controlled. During the period of the company, the expense rate was 14.97%, a decrease of 0.95% over the same period last year, which was well controlled, of which the management expense rate was 9.71%, a decrease of 0.63% over the same period last year. In recent years, the cost control ability of the company has gradually improved, which has improved the profitability of the company to a certain extent.
Earnings forecast and investment rating: we expect the company to earn 0.47,0.55 and 0.66 yuan per share in 2011-2013. Based on the latest closing price of 22.88 yuan, the corresponding dynamic P / E ratios are 49 times, 41 times and 35 times, respectively. As the company's performance growth expectations are relatively robust, and there is still the possibility of injecting general aviation manufacturing-related assets, we maintain the company's "overweight" rating.
Risk tip: the risk that the business performance of auto parts is lower than expected; the risk of a sharp rise in the cost of raw materials.
