From January to September 2010, the company achieved operating income of 817 million yuan, an increase of 33.4% over the same period last year; operating profit of 50.828 million yuan, an increase of 48.76% over the same period last year; net profit of 37.039 million yuan belonging to the owner of the parent company, an increase of 45.96% over the same period last year; and diluted earnings per share of 0.23 yuan. The company expects net profit attributable to the parent company to grow by 30%, 50% year-on-year in 2010.
The company specializes in wire and cable research and development, production, sales and service, landing on September 10 small and medium-sized board. At present, the company's main products are 35kV and below wires and cables, including power cables, electrical backup wires and cables and bare wires, of which power cables accounted for 80.49% of the company's revenue in 2009, which is the company's main product. Most of the company's customers are the State Grid Company and the Power supply Bureau of Southern Power Grid.
The company's sales revenue growth is mainly due to the following reasons: the copper price of raw materials has risen, and the company's products are based on copper prices; the company has increased its investment in production and sales, and gradually completed the laying of the sales network and the construction of the sales team. the sales channel is further broadened; the use of "direct marketing" sales model, relying on team marketing and proactive services to achieve results; new plant and equipment gradually put into use to increase production capacity.
The gross profit margin was stable and the expense rate decreased slightly during the period. During the reporting period, the company's comprehensive gross profit margin was 16.1%, which was basically the same as that of the same period last year. During the period, the expense rate was 8.7%, 1.5 percentage points lower than the same period last year, of which the sales expense rate decreased the most, down 0.8 percentage points from the same period last year. The decrease of expense rate during the period is the main reason why the company's profit growth rate is faster than that of revenue growth.
Marching towards high pressure. The company's investment project is 500kV environment-friendly flame retardant UHV cross-linked cable and 500kV resource-saving aluminum alloy overhead line project. It is expected to start production in the second half of 2012. When the project is completed and reaches production, it will add 110kV, 220kV, 500kV environment-friendly flame retardant high-voltage and ultra-high voltage cross-linked cable 600km, and the production capacity of 10000t of various resource-saving aluminum alloy overhead lines. 220kV and 500kV voltage grade cables need to go through an one-year appraisal test before they can be sold, so at the beginning of the project, the company will mainly sell 110kV voltage grade products.
Earnings forecast and rating: we expect the company's EPS from 2010 to 2012 to be 0.47,0.61 and 0.83 yuan, respectively. Based on the closing price of 25.20 yuan on October 19, the corresponding dynamic price-to-earnings ratio is 54 times, 41 times and 30 times respectively. The valuation of the company has been at a high level among similar listed companies, giving the company a "neutral" investment rating for the first time.
Risk hints: 1) the risk that the product can not pass the pre-identification test in time; 2) the operational risk caused by the sharp fluctuation of copper price.