According to the first quarterly report of 2009, the company achieved operating income of 127 million yuan, down 53.0% from the same period last year; operating profit was 4.29 million yuan, compared with-23.29 million yuan in the same period last year; net profit attributed to the owner of the parent company was 1.27 million yuan, compared with-25.23 million yuan in the same period last year; diluted EPS was 0.007 yuan, compared with-0.137 yuan in the same period last year. At the same time, the company expects that the company's performance in the first half of 2009 is still expected to turn from deficit to profit compared with the same period last year.
The fall in zinc prices led to a 53.0 per cent drop in revenue from a year earlier. The company is mainly engaged in lead, zinc and other non-ferrous metal mining, zinc smelting, hydropower, etc., of which zinc business income accounts for more than 90%. During the reporting period, operating income decreased by 53% compared with the same period last year, mainly due to a sharp drop in the average sales price of zinc ingots, the company's main product, during the reporting period compared with the same period last year.
The turnaround is mainly due to the decline in the price of inventory and the preparation for resale. During the reporting period, the company's gross profit margin increased by 20.8% year-on-year and 25.7% month-on-month to 18.5%, respectively, and the operating performance showed a turnaround from deficit to profit. we believe that it is mainly due to the reduction in the cost of the main business due to the rewriting of inventory prices at the end of last year, so it is not sustainable. At the same time, it is necessary to note that during the reporting period, the expense rate rose 6.4 percentage points year-on-year to 14.9%, seriously squeezing the company's profit space and worrying about cost control.
Zinc is expected to be a kind of metal with better performance. Compared with other base metals, the bottom characteristic of zinc is the most obvious, and it is gradually coming out of the bottom area. Since 2009, LME3 monthly zinc prices have risen 17.5 per cent, far less than the 32.2 per cent rise in copper and 43.6 per cent in lead. If the liquidity of the market connects well with the downstream demand, zinc is expected to be a relatively good metal.
Profit forecast. We estimate that the company's net profit belonging to the owner of the parent company in 2009 is 9.81 million yuan, and the diluted EPS in 2009 and 2010 is 0.05yuan and 0.16yuan respectively. Based on the closing price of 10.13yuan on April 27th, the corresponding dynamic price-to-earnings ratio is 203times and 63 times respectively. At present, the stock price deviates from its fundamentals and maintains the company's "neutral" investment rating.
