Annual and quarterly reports

The company's revenue in 2012 was 18.3 billion yuan, +13% year on year; net profit attributable to shareholders of listed companies was 46 million yuan, +84% year on year; earnings per share were 0.038 yuan. Basically in line with expectations. 2013 Q1 revenue was 4.8 billion yuan, +38% year on year; net profit attributable to shareholders of listed companies was 14 million yuan, +37% year on year; earnings per share were 0.012 yuan. Revenue growth exceeded expectations.

frontal

Revenue growth picked up. Revenue growth improved quarterly from 2012 Q3 to 2013, increasing 16%, 26%, and 38%, respectively, year-on-year. Revenue growth performance was superior to Hisense Electric.

Negative

Profitability is insufficient. The company used a price war to increase its market share, and gross margins in 2012 Q4 and 2013 Q1 declined 1.3 ppt and 2.4 ppt respectively over the same period last year. The company's overall profitability is still very weak. The gross margin of the mobile phone business has declined sharply. The gross margin of the mobile phone business fell 7ppt year on year in 2012, to only 13%. The company's mobile phone business is uncompetitive and unable to adapt to the smartphone era. White electricity fell 15% in the second half of the year. Although revenue growth for color TV and mobile phones picked up in the second half of the year, the decline in white phones fell short of market expectations.

Development trends

In the intelligent era, the competitiveness of the company's products is still insufficient, and profits are expected to fluctuate near the break-even line.

Valuation and advice

Keeping the profit forecast unchanged, the company's earnings per share in 2013-2014 were 0.07 and 0.08 yuan. Since it was close to break-even, the company did not fit the PE valuation method and maintained a “neutral” rating. Currently, the company's PB valuation is 1, and the headquarters land has value-added potential.

Risk: The risk of a price war in the color TV industry.