Event description:

Gansu Huangtai Liquor Industry Co., Ltd. issued the "semi-annual results notice for 2010" on July 12. According to the announcement, the company's net profit in the first half of 2010 was about-10 million yuan to-16 million yuan, a year-on-year loss reduction of 61.2% to 37.82%, earnings per share of about-0.056 yuan to-0.09 yuan, and a year-on-year loss reduction of 62.66%.

Event comments:

The performance of the report is in line with expectations. According to the announced half-year net profit of-10 million yuan to-16 million yuan, earnings per share are about-0.056 yuan to-0.09 yuan, which is in line with our previous profit forecast.

The off-season has passed and there will be a peak demand season in the second half of the year. The second quarter of each year is the off-season of traditional sales in the liquor industry. With the increase of the company's investment in marketing and the arrival of the peak sales season in the second half of the year, liquor business is expected to achieve great growth.

The sharp increase in management costs is due to the resumption of production and sales. At present, the company has started four production lines and increased the construction of the marketing team, resulting in a substantial increase in management costs in the short term.

According to our previous estimates, the company's EPS from 2010 to 2011 is 0.04yuan and 0.14yuan respectively, corresponding to PE 170,49 times. Pay attention to the recovery of the company's liquor business and continue to maintain a "neutral" rating.