The performance was slightly lower than expected

In the first half of the year, the company's revenue was 9.4 billion, which was + 34% compared with the same period last year; the net profit attributed to the parent company was 400 million, which was + 235% compared with the same period last year; and the net profit after deducting non-profit was 140 million, and + 136% from the same period last year. Revenue in the second quarter was 4.6 billion, which was + 30% compared with the same period last year; the net profit attributed to the parent company was 260 million, which increased significantly compared with the same period last year, but the net profit margin was still very low, only 0.55%, slightly lower than we expected.

The company implemented the scale strategy, in the first half of the year, the comprehensive gross profit margin decreased 1.9ppt compared with the same period last year, and decreased 0.7ppt compared with the previous year. Among them, the gross profit margin of color TV fell 2ppt to 17.4% compared with the same period last year, but revenue also grew rapidly by 45%, significantly higher than that of the industry. The mobile phone business grew 22 per cent in the face of industry demand, but gross profit margin fell 2.5ppt to 9.9 per cent year-on-year. In the case of a general increase in the gross profit margin of the white power industry, the company's white electricity gross profit margin fell 4ppt to 15.2% compared with the same period last year, resulting in a business loss.

Cost control is relatively reasonable, sales expenses and management expenses in the first half of the year increased by 24% and 13% respectively compared with the same period last year.

Trend of development

In the third quarter, the company is facing greater competition pressure, color TV market demand decline, industry competition intensified.

As the only implementing body of the "headquarters factory area urban renewal project", the company has been questioned by the major shareholder Huaqiaocheng Group, which leads to doubts about the ownership of the company's best quality assets. Due to historical reasons, the overseas Chinese Town Group believes that the land use right of the headquarters belongs to the overseas Chinese Town Group, and the two sides are currently negotiating.

Profit forecast adjustment

To maintain the profit forecast, the EPS of the company in 2013-14 is 0.07yuan and 0.08yuan respectively.

Valuation and suggestion

The PE valuation of the company in 2013-14 is 48X and 43X respectively. Maintain a "neutral" rating