Net profit in the first three quarters increased by 74% compared with the same period last year. The company today released its third quarterly report for 2010: operating income was 270 million yuan, down 20.8% from the same period last year; net profit attributed to the parent company was 56 million yuan, up 73.8% from the same period last year; and earnings per share was 0.30 yuan, with net assets per share of 4.31 yuan.
Small real estate developers under Guangzhou State-owned assets Supervision and Administration Commission. The company is mainly engaged in real estate development, investment and property leasing and management and other business, the project is mainly distributed in Guangzhou and Changsha, the company's operating scale is relatively small, the actual control is the background of Guangzhou SASAC. At present, the company is mainly selling three groups of projects: Changsha Pearl River Huacheng Project Group 2, Guangzhou Pearl River New Bank apartment Project, Guangzhou Pearl River New City Project and Changsha Pearl River Huacheng Project. Guangzhou Guanglong project, S8 project and Changsha plot are still under planning.
Two factors led to a sharp increase in net profit compared with the same period last year. The company's delivery and settlement area was small in the first three quarters, and revenue fell 21% from the same period last year, but two major factors led to a sharp increase in net profit by 74% year-on-year: first, the gross profit margin increased. In the first three quarters, the company's comprehensive gross profit margin was 48.2%, an increase of 11.6 percentage points over the same period last year, mainly due to the high gross profit margin of the Pearl River Xinan apartment project carried over during the reporting period. Second, the impairment of assets is ready to be washed back. During the reporting period, the company recouped the provision for bad debts of 14 million yuan, accounting for 18.3% of the current operating profit.
The ability of cost control is strong. During the reporting period, the company's expense rate was 14.5%, a slight increase of 1.1% over the same period last year. In the case of a significant decline in revenue, the increase in the expense rate was limited, and the company had a strong ability to control expenses.
Sales were poor in the first three quarters. The company did not release specific sales data for the first three quarters, but the cash received for the sale of goods and services was 213 million yuan, down 46.6% from the same period last year; the amount received in advance at the end of the reporting period was 13 million yuan, down 83.0% from the beginning of the year, and the certainty of performance in the next two years was very low. After deducting the advance collection, the asset-liability ratio is 55.5%; the book capital is 278 million yuan, and the total amount of short-term loans and non-current liabilities due within one year is 102 million, so the company has less pressure on short-term debt repayment. The net inflow of operating cash in the first three quarters of the company is-307 million yuan, and the operating cash gap is still large.
Maintain a neutral rating. We estimate that the company's EPS from 2010 to 2011 is 0.38 yuan and 0.47 yuan, based on the latest closing price of 11.76 yuan, the corresponding price-to-earnings ratio is 31 times and 25 times, the valuation level is on the high side, the company has less project reserves, uncertain growth prospects, and maintain a "neutral" rating.
Risk hint. The uncertainty of performance in the next two years is low; the progress of project development and sales may not be as expected.