In 2009, the company achieved operating income of 239 million yuan, an increase of 7% over the same period last year; operating profit of-3.02 million yuan, reducing losses by 68% over the same period last year; net profit belonging to the parent company was 11.45 million yuan, down 51% from the same period last year; and basic earnings per share was 0.06 yuan.
The performance is higher than we expected, but lower than the 0.07 yuan disclosed in KuaiBao.
The annual profit mainly comes from non-operating income. The company mainly deals in paints and pigments. Due to the parking technical renovation of the pigment production line, the increase in marketing costs for new products and the loss of impairment of assets, the company's main business is at a slight loss. The annual profit mainly comes from 13.11 million non-operating income, accounting for 130% of the total profit, mainly including government subsidies and other payable income.
There is an inflection point in the main paint industry. In 2009, the company's paint business accounted for 73% of its revenue, with a paint production capacity of 50,000 tons per year. Due to the high growth of demand driven by investment in real estate and infrastructure, the decline in raw material prices and the strengthening of marketing efforts by the company, the gross profit margin of the paint business rose to 27% from 14% in 2008, and reached an all-time high of 28% in the second half of the year. Gross profit margin of the business increased by 121% compared with the same period last year. Without taking into account the impairment of assets, the company's main business has turned a loss into a profit.
Breakthroughs have been made in high-end technology, and the integration of painting has improved the profitability. The wind power paint of the company has passed the provincial appraisal of Gansu Province, the marine paint has passed the CCS certification, and the technology in the field of special paint has reached the leading level in China. Especially for wind power coatings, as the company is located in the northwest region with the most abundant wind energy resources in China, the future market potential is huge. At present, the new products are in the stage of vigorous marketing, and the contribution to short-term performance is relatively small, so we need to look at the company's technological breakthroughs from a forward-looking perspective. In addition, the company is actively expanding the painting integration market. At the end of 2009, the company cooperated with Shaanxi Automobile to carry out the annual painting 60,000 frame electrophoresis line project, which can form a strategic cooperative relationship with customers and improve sales and prices to key customers.
The land value of the old factory area remains to be developed. Due to the policy of "leaving the city and entering the park", the company still owns 117 mu of industrial land in the original factory area after the relocation, with a book value of 126 million yuan, accounting for 17% of the total assets. At present, it is in the stage of changing the nature of land into commercial land, and the specific disposal time and development plan have not been determined.
Earnings forecast and investment rating: without taking into account land disposal, we expect the company's EPS in 2010 and 2011 to be 0.06,0.10 yuan respectively, corresponding to the closing price of 8.39 yuan on March 10, with a price-to-earnings ratio of 138,85 times, maintaining a neutral rating. Investors are advised to pay attention to the investment opportunities brought about by the improvement of the company's main business performance and the concept of new energy related to wind power.
Risk hint. The risk of impairment of accounts receivable left over from the company's history; the risk that the market promotion of new products (especially wind power paint products) is lower than expected.