From January to September 2009, the company achieved operating income of 752 million yuan, an increase of 37.7% over the previous year; operating profit of 37 million yuan; loss of 104 million yuan for the same period last year; net profit attributable to owners of the parent company was 30 million yuan, loss of 70 million yuan for the same period last year; and diluted earnings per share of 0.114 yuan.
Among them, we achieved operating income of 130 million yuan in July-September, an increase of 69.4% over the previous year; operating profit of 119 million yuan, with a loss of 39 million yuan in the same period last year; net profit attributable to owners of the parent company was 115 million yuan, with a loss of 23 million yuan for the same period last year; and diluted earnings per share of 0.056 yuan.
The increase in heating prices and the increase in business volume have contributed to a significant increase in operating income. The company is mainly engaged in heating and steam supply for civil and industrial use. In the first three quarters of this year, the company's revenue increased 37.7% year on year, higher than the 29.6 percentage point increase for the full year of 2008, and also higher than the year-on-year growth rate of the first quarter and first half of this year. This is mainly due to the year-on-year increase in the average sales price of the company's thermal products, and the increase in the company's heating business volume.
The fall in raw material prices has boosted overall profitability. In the first three quarters, the company achieved a gross profit margin of 21.4%, a sharp increase of 23.2 percentage points over the previous year, and the year-on-year increase has shown a trend of increasing quarterly since the beginning of the year. After recovering profits in 2007, the company returned to losses in 2008, mainly due to a sharp rise in the prices of the two main raw materials — coal and steel. The economic crisis gradually deepened in late 2008, and the slowdown in downstream demand caused coal and steel prices to drop sharply. The company's profitability gradually recovered from the fourth quarter of 2008, and the year-on-year increase in gross margin gradually increased. We expect this good trend to continue in the fourth quarter of this year.
The growth rate of real estate investment is accelerating to ensure that the scale of the company's heating business grows. The main risk to the company's operation and development is the impact of the slowdown in urban real estate construction on the expansion of the company's heating market and the development of heating load. Since the beginning of this year, the growth rate of real estate investment in China has continued to accelerate, and the growth rate of commercial housing sales area and newly started construction area has also continued to rise. The company's heating business volume is expected to maintain a good growth trend in the next few years, promoting an increase in consolidated profit levels.
Recovering profitability throughout the year is not a problem. The company achieved net profit of 30.4 million yuan in the first three quarters, and the company expects to achieve net profit of about 40 million yuan for the whole year. Based on the current price levels of coal, water, electricity, etc. and their development trends, we expect the company to achieve this level of net profit throughout the year should not be a problem.
Risk warning: 1. Prices of raw materials such as coal and steel have risen more than expected; 2. Heating load has dropped more than expected this winter, etc.
