From January to September 2008, the company achieved operating income of 960 million yuan, a year-on-year decrease of 5.45%; operating profit of 72.36 million yuan, a year-on-year decrease of 32.09%; net profit attributable to owners of the parent company was 55.26 million yuan, an increase of 4.82% over the previous year; and diluted earnings per share of 0.034 yuan.
Revenue from the main business declined slightly. The company's real estate business revenue was basically the same as the same period last year. Revenue was about 500 million yuan, but it contributed most of the operating profit. Other operating income mainly comes from sales of products such as steel, and since the gross margin of this part of the business is extremely low, less than 1%, it contributes very little to net profit.
Investment income, income from changes in fair value, and non-operating income contributed significantly to performance. The company transferred 50% of Guangdong Jinbin Company's shares in the first half of the year, with a total amount of 180 million yuan, and received investment income of 30.43 million yuan during the reporting period. Due to the increase in the market value of the company's office projects, the fair value change income was 2017 million yuan. In addition, the company received 35.28 million yuan in financial equity transfer penalties. The sharp increase in non-operating income caused the company's net profit to increase even when operating profit declined.
Expenses have increased significantly. The company's expense rate increased sharply by about 10 percentage points to 21.70% during the January-September period. Among them, financial expenses and management expenses increased by 84.53% and 58.85% respectively over the same period last year. The sharp increase in expenses is the main reason for the decline in the company's operating profit. The company faces greater financial cost pressure and the need to improve management efficiency to reduce management expenses.
It is expected to benefit from the development of the Binhai New Area. As the country's emphasis on the development of the Binhai New Area has continued to increase in recent years and the gradual improvement of infrastructure construction in the region, as a major real estate development enterprise in the region with resource advantages, the company is expected to benefit from the development of the Binhai New Area.
The project reserves are quite rich. The company's current projects include Margaux Manor, Kin-Chin Homeland, 860 acres of land development in Meijiangnan, 110,000 square meters of land development in the Development Zone, 250,000 square meters of land development at the Hangu Amusement Port, etc., with a total project reserve of about 1.2 million square meters.
Profit forecasts and ratings. We predict that the company's earnings per share in 2008 and 2009 will be 0.07 yuan and 0.09 yuan respectively. The corresponding dynamic price-earnings ratios are 47 times and 36 times, respectively. The valuation is relatively high, giving it a “neutral” rating.
