In the first half of 2012, the company achieved operating income of 87.357 million yuan, an increase of 2.7% over the same period last year; operating profit of 26.223 million yuan, an increase of 0.03% over the same period last year; net profit belonging to the owner of the parent company was 22.167 million yuan, an increase of 5.4% over the same period last year; and basic earnings per share was 0.09 yuan.
The performance in the second quarter further improved. In the second quarter of 2012, the company achieved operating income of 44.287 million yuan, an increase of 2.9% over the same period last year, an increase of 2.8% over the same period last year; operating profit of 13.832 million yuan, an increase of 4.3% over the same period last year, and an increase of 11.6% over the same period last year; and the net profit belonging to the owners of the parent company was 11.748 million yuan, up 9.1% from the same period last year and 12.8% from the previous year.
The expansion of income scale is mainly due to the increase in income from loading, unloading and storage of oil products. From a product point of view, the company's handling and storage income from crude oil, liquid chemical industry and oil products was 36.741 million yuan, 20.444 million yuan and 26.585 million yuan respectively, up-0.5%, 1.7% and 9.3% over the same period last year.
The increase in profit level is mainly due to the increase in investment income. During the reporting period, the company made an investment income of 13.038 million yuan, an increase of 36.5% over the same period last year, accounting for 49.7% of the current operating profit. Among them, the business volume of Longtan Company, which is 25% owned by the company, increased significantly, with a cumulative container loading and unloading volume of 934000 TEU, an increase of 23.7% over the same period last year, an operating income of 170 million yuan, an increase of 16.3% over the same period last year, and a contribution of investment income of 10.995 million yuan, an increase of 40.6% over the same period last year. The newly developed customers and loading and unloading storage in Yangzhou of Sinochem increased with operating income of 32.188 million yuan, up 11.5% over the same period last year, and contributed investment income of 2.04 million yuan, up 17.8% from the same period last year.
The cost increases obviously, the profitability drops. As cost growth (6%) was significantly faster than revenue, the company's consolidated gross profit margin fell 1.6 percentage points year-on-year to 48.4%. In addition, financial expenses increased significantly by 46.4 per cent, resulting in an increase of 2.8 percentage points to 29.6 per cent over the same period last year.
Maintain a "neutral" rating. We expect the company's earnings per share in 2012 and 2013 to be 0.16 yuan and 0.18 yuan respectively, with a corresponding dynamic price-to-earnings ratio of 33 times and 29 times respectively based on the closing price of 5.16 yuan on August 16, 2012, giving it a "neutral" investment rating.
Risk hint: domestic economic growth slows down, oil loading and unloading storage demand growth rate decreases.