From January to September 2009, the company achieved operating income of 260 million yuan, down 31.1% from the same period last year; operating profit was-6.8 million yuan, down 117% from the same period last year; net profit belonging to the owner of the parent company was-7.33 million yuan, down 122% from the same period last year; and basic earnings per share was-0.03 yuan. The company expects its net profit and loss in 2009 to be no more than 10 million yuan.
In the third quarter, the main revenue increased by 27.7% from the previous quarter, while the net profit decreased by 61.8% from the previous quarter.
The company is mainly engaged in the production of printed circuit boards (PCB), including single-panel, double-panel and multilayer boards. The revenue from the main business in the third quarter was 110 million yuan, an increase of 27.7% over the previous quarter. Gross profit margin fell 1.2 percentage points month-on-month to 6.24%. We judge that the decline in gross profit margin is mainly due to the increase in the price of raw materials. The net profit attributed to the parent company in the third quarter was 480000 yuan, down 61.8% from the previous quarter.
Tap major customers to seek new profit growth points. Downstream of the company's main application areas are communications, automotive, automatic control, medical and security, the current major customers are Motorola, Nokia, Schneider Electric, Samsung Electronics, Hyundai Electronics, Hisense and so on.
Due to the low concentration of the printed circuit board industry, the competition among manufacturers is very fierce, as a result, printed circuit board enterprises are in a weak position in price negotiation, whether upstream (mainly copper clad laminate, non-ferrous metals and chemical enterprises) and downstream (mainly machine manufacturers). Under the background of the economic crisis, many domestic small and medium-sized printed circuit board enterprises have closed down due to the sharp decline in demand and the rupture of the capital chain, which to a certain extent slows down the current state of oversupply and promotes the improvement of industry concentration. it will promote the future capacity expansion of the industry to be rational. The company is digging up big customers like Huawei to win new orders and seek new profit growth.
The HDI project is difficult to achieve in the short term and will thicken its performance in the future. The company's fund-raising project, high-density multilayer interconnection printed circuit board (HDI), will be put into production in the near future. HDI board is mainly used for mobile phones, accounting for about 50% of the total consumption, followed by IC board, accounting for about 15%. Other demand mainly comes from consumer products such as notebook computers and digital cameras GPS. The profitability of the HDI board is higher than that of the company's existing business, and we judge that the HDI project will increase the company's operating income and net profit in the future. However, considering that the HDI board is a new technology, the company has no production experience, so whether the company can quickly achieve capacity climbing and improve the rate of quality is a major challenge for the company, which is difficult to do in the short term.
We expect the HDI project to reach stable mass production in the middle of next year, and if the project runs as scheduled, it will effectively support the performance in the second half of 2010.
We expect the company's earnings per share in 2009, 2010 and 2011 to be-0.03 yuan, 0.12 yuan and 0.25 yuan respectively. According to the closing price of 6.99 yuan on October 26th, 2009, the corresponding dynamic price-to-earnings ratio in 2010 and 2011 is 57 times and 29 times respectively. In view of the high valuation of the company, maintain the company's "neutral" investment rating.
