From January to June 2011, the company achieved operating income of 925 million yuan, an increase of 23.30% over the same period last year. The net profit belonging to the owner of the parent company was 34.18 million yuan, a decrease of 52.58% compared with the same period last year. In the second quarter, the company realized operating income of 463 million yuan, an increase of 21.56% over the same period last year and 0.28% month-on-month growth; the net profit belonging to the owner of the parent company was 15.24 million yuan, down 73.46% from the same period last year, and 19.53% less than the previous year.
During the reporting period, the company transferred Fuzhou Jiujiu Red Flag Automobile sales and Service Co., Ltd. and made an investment income of 4.41 million yuan.
The gross profit margin rebounded in the second quarter, and the expense rate decreased during the period. Affected by the rapid growth of the company's water business and the increase in gross profit margin, the company's comprehensive gross profit margin in the first half of the year was 13.44%, up 1.50 percentage points from the same period last year, 3.65 percentage points in the second quarter from the same period last year, and 1.10 percentage points from the previous quarter. Under the influence of the increase in the proportion of the company's water business and the increase in gross profit margin, the company's gross profit margin is expected to continue to improve. In the first half of the year, the company's expense rate was 9.88%, down 0.49% from the same period last year, although it rose 1.71% in the second quarter from the same period last year, but decreased by 1.48% from the same period last year.
The growth rate of the company's automobile trade business declined as scheduled, and the profit focus shifted to the water business. In the first half of the year, the company's auto trade business achieved an operating income of 625 million yuan, an increase of only 8.83% over the same period last year, which is in line with our expectations. The company's water business achieved operating income of 65.89 million yuan, an increase of 34.72% over the same period last year. At the same time, gross profit also rose 1.61%, contributing 28.87 million yuan to gross profit, and gross profit increased by 4.38% to 31.61%.
Water engineering and sewage treatment are industries encouraged by national policies and are expected to continue to grow rapidly in the future to support the company's profitability.
The company participates in Zhangzhou Agricultural and Commercial Bank and has begun to contribute income. Last year, the company took a 10% stake in Fujian Zhangzhou Rural Commercial Bank Co., Ltd. In January and March 2011, the company received approval from China Banking Regulatory Commission and Fujian Regulatory Administration, respectively, agreeing to the opening of Fujian Zhangzhou Rural Commercial Bank Co., Ltd. the registered capital of Fujian Zhangzhou Rural Commercial Bank Co., Ltd. is 400 million yuan, contributing 6.23 million yuan to the company's investment income in the first half of the year.
The company's real estate development business began to contribute income during the year, but the profit prospect is not optimistic. The Nanjing Jingcheng Sheng Fa Mingdu project, which is responsible for the development and construction of the company Zhangzhou Shengfa Real Estate Co., Ltd., has entered the construction stage, and the first phase of the project has opened on July 28 and is expected to make profits in the second half of the year; the Jiangbin Road-Zhongfa Road site developed by Xinbao Real Estate Company has completed the design adjustment of the project, obtained the examination and approval of the planning department, and gone through the relevant construction procedures, and has basically completed the construction of the pile foundation. The state's regulation and control policy on real estate development continues to tighten. In the "National five articles" announced recently, the purchase restriction order will be extended to some second-and third-tier cities, and the central bank has continuously raised interest rates in the past year, limiting a large number of purchase demand. The company's real estate development business profit prospects are worrying.
Profit forecast and rating. It is estimated that the EPS of the company from 2011 to 2013 is 0.21,0.29,0.36 yuan, according to the current closing price of 6.19 yuan, the corresponding dynamic PE is 30 times, 22 times, 17 times respectively, maintaining the "neutral" investment rating.
Risk hint. (1) the risk that the revenue growth rate of the company's automobile trade business will decline faster than expected; (2) the risk of the company's water business growth slowing down.