In 2011, the company achieved operating income of 8.178 billion yuan, an increase of 27.74% over the same period last year; operating profit of 285 million yuan, an increase of 16.74% over the same period last year; net profit belonging to the owner of the parent company was 174 million yuan, an increase of 21.1% over the same period last year; and basic earnings per share was 0.29 yuan per share.
The company is mainly engaged in the research and development, production and sales of air-conditioning compressors, as well as refrigeration-related businesses such as refrigerator compressors and commercial freezers and special air conditioners.
In 2011, the company produced 17.53 million air-conditioning compressors, an increase of 10.41% over the same period last year, and sold 17.55 million air-conditioning compressors, an increase of 18.56% over the same period last year. According to the statistics of the China Home Appliances Association, in 2011, the company's sales of air-conditioning compressors accounted for 15.32% of the national market share, continuing to maintain a leading position in the technology and market of air-conditioning compressors. The company's customers are Gree, Midea, Haier, Ox, Zhigao and other major domestic air-conditioning manufacturers, of which Gree is the company's largest customer.
The company's gross profit margin has fallen. In 2011, the company's consolidated gross profit margin was 12.8%, down 1.2 percentage points from a year earlier. On a quarter-by-quarter basis, the comprehensive gross profit margin in the fourth quarter of 2011 was 14.1%, down 1.2 percentage points from the same period last year.
The ability to control the expense rate is enhanced during the period of the company. The expense rate during the company period in 2011 was 9.3%, down 0.7 percentage points from the same period last year. Among them, the management expense rate was 5.3%, down 0.9% from the same period last year; the sales expense rate was 2.3%, down 0.4% from the same period last year; and the financial expense rate was 1.7%, up 0.6% from the same period last year.
The company will invest 3.607 billion yuan in new projects in the next five years. The company plans to issue 65 million additional shares to the controlling shareholder Shanghai Electric (Group) Corporation and raise 506 million yuan for the transformation and expansion project of small energy-saving and fluorine-free frequency conversion compressors and the new production capacity project of L series ultra-high efficiency compressors. Both projects were put into production in 2012, and after all the projects are in production, the company will increase the production capacity of 2 million small compressors and 2 million L-series high-efficiency compressors. It is expected that after all the projects reach production, the profit will increase by 105 million yuan, and the earnings per share will be increased by 0.16 yuan according to the share capital after the additional issue. The rest of the funds will be raised by the company itself through various refinancing channels to provide financial guarantee for the company's sustainable development.
Earnings forecast: we expect the company's earnings per share from 2012 to 2013 to be 0.54 yuan and 0.77 yuan respectively, according to the latest closing price, the corresponding dynamic price-to-earnings ratio is 13 times and 9 times respectively, maintaining the company's "overweight" investment rating.
Risk hint: the progress of the new project is not as expected; downstream demand is shrinking.
