In the first three quarters of 2009, the company achieved operating income of 937 million yuan, an increase of 33.16% over the same period last year; operating profit of-5.86 million yuan, reducing losses by 41.9%; net profit belonging to the parent company was 2.82 million yuan, an increase of 43.5% over the same period last year; and earnings per share were 0.02 yuan.
China's trade picked up in the third quarter. In the first three quarters of China, imports and exports totaled US $1.5578 trillion, down 20.9 percent from the same period last year. Of this total, the decline was 24.9% in the first quarter, 22.1% in the second quarter and 16.5% in the third quarter. In the first three quarters, exports totaled US $846.6 billion, down 21.3%; imports reached US $711.2 billion, down 20.4%; and the surplus was US $135.5 billion, down US $45.5 billion from the same period last year. Trade picked up in the third quarter, and it is expected that China's trade will pick up in an all-round way throughout the year.
The company's gross profit margin fell and lost money in the third quarter. The company's gross margin fell 0.57 percentage points to 3.01% in the first three quarters, while gross margin fell 0.59 percentage points to 1.94% in the third quarter. The company lost 2.82 million yuan in the third quarter.
The cost is well controlled in order to weather the danger. The sales expenses incurred by the company during the reporting period were 220000 yuan, down 33.25% from the same period last year, and the sales expense rate was 0.02%, 0.02% lower than the same period last year. The management fee was 26.32 million yuan, an increase of 11.57% over the same period last year, and the management expense rate was 2.81%, a decrease of 0.54% over the same period last year. The financial expenses were 7.33 million yuan, down 27.43% from the same period last year, and the financial expense rate was 0.78%, down 0.65% from the same period last year. The company's operating performance continues to deteriorate, and the control of expenses will help the company to tide over the crisis.
The company accelerates the construction and planning of the wind power industry. In 2007, the company acquired 100% equity of Inner Mongolia Huitong Energy Investment with 99 million yuan. Through the acquisition, the company will obtain the 49.5MW wind power concession and related approval documents in Bayinxile Wind Farm (Phase I) in Zhuozi County, Wulanchabu City, Inner Mongolia, and the exploration right of 1000MW wind farm in Siziwang Banner, with a total wind farm resources of 400km2. After the wind farm is fully put into production, the annual generating capacity is 3.75 billion kilowatt-hours, and the annual sales revenue is expected to reach 2.063 billion yuan and the net profit is 371 million yuan. The project is still under construction, and its impact on 2009 performance will not be considered for the time being.
Earnings forecast: the company is expected to earn 0.09 yuan per share and 0.11 yuan per share in 2009 and 2010. Calculated with the previous day's closing price of 10.19 yuan, the corresponding dynamic price-to-earnings ratios in 2009 and 2010 were 115 times and 97 times, respectively. Due to the high valuation, the company maintained its "neutral" investment rating.
Risk hints: (1) the trading environment deteriorates and the company's trading business is under pressure; (2) the development of wind power business is uncertain.