From January to September 2010, the company achieved operating income of 2.544 billion yuan, down 5.94% from the same period last year; operating profit was-43.04 million yuan, compared with-13.05 million yuan in the same period last year; net profit belonging to the owner of the parent company was-45.22 million yuan, compared with-6.71 million yuan in the same period last year; EPS was-0.065 yuan. Of this total, operating income in the third quarter was 681 million yuan, down 65.84% from the same period last year; operating profit was-53.47 million yuan, compared with-13.04 million yuan in the same period last year; net profit attributable to the owner of the parent company was-50.65 million yuan, compared with 1.79 million yuan in the same period last year; and EPS was-0.073 yuan.
Gross profit margin increased by about 3 percentage points compared with the same period last year. In the first three quarters, the company's comprehensive gross profit margin was 13.14%, an increase of 3.04 percentage points over the same period last year. Among them, the gross profit margin in the third quarter was 12.59%, an increase of 3.4 percentage points over the same period last year, and a month-on-month decrease of 0.3 percentage points.
During the period, the expense rate increased by 3.54 percentage points compared with the same period last year. In the first three quarters, the company's expense rate during the period was 12.5%, an increase of 3.54% over the same period last year, of which the sales expense rate increased by 1.85% to 3.54%, mainly due to the switch between "Grade II" and "Grade III" models; the management expense rate increased by 0.52% to 5.36%. The financial expense rate increased by 1.16 percentage points year-on-year to 1.72%, mainly due to the appreciation of the RMB, affected by exchange rate fluctuations. Due to the full implementation of the "country 3" standard in the second half of 2010, it is expected that the company's sales expense rate will still increase in the fourth quarter compared with the same period last year, and the annual expense rate is expected to increase by about 1 percentage point.
Investment income and non-operating income fell sharply compared with the same period last year. The company's investment income in the first three quarters was 17.52 million yuan, down 40.46% from the same period last year, mainly because the company's investment income from the transfer of Bank of Communications shares was 11.11 million yuan in the same period last year. Non-operating income was 5.83 million yuan, down 80.37% from the same period last year, mainly due to the recognition of Jingkou land income and Shenzhen Diwang Building disposal income in the same period last year.
The first phase of the overall relocation and technical renovation project will be completed in 2011. The overall relocation and technical renovation project is divided into five sections for construction. The first section will officially start construction in October 2010 and is expected to be completed by the end of July 2011. It will mainly produce large displacement, medium and high-end motorcycles and engines. Its annual production capacity will reach 850000 and 950000 respectively, and the output value is expected to reach 5 billion yuan after it is put into production.
Profit forecast. It is estimated that the EPS of the company from 2010 to 2012 will be-0.01,0.01,0.02 yuan respectively. Based on the closing price of 10.22yuan on October 29th, the dynamic price-earnings ratio will be-797x, 1059 times and 482x respectively, maintaining the "neutral" investment rating of the company.
Risk hint. (1) the risk of higher-than-expected rise in steel prices; (2) the risk that the progress of relocation and technical renovation projects is lower than expected.
