The three-quarter net profit fell within the previous forecast range. In the first three quarters of 2014, the company's operating income increased by 22.7% to 830 million yuan compared with the same period last year, while the net profit attributable to shareholders decreased by 12.75% to 7.5908 million yuan, realizing the current EPS of 0.05 yuan under equity. In the first three quarters, the comprehensive gross profit margin fell 1.66 percentage points from the same period last year to 9.64%, which we believe is an important factor leading to the decline in net profit.
The fourth quarter is expected to lose money. The company expects the net profit to be attributed to shareholders to vary from-3.0535 million yuan to 2.0357 million yuan in 2014, down 80% to 130% from the same period last year, with falling orders and profit margins as the main reasons. According to this estimate, the fourth quarter net profit is expected to be-10.6443 million yuan ~-5.5551 million yuan, there will be a loss. We have adjusted the company's itemized business income and gross profit margin accordingly. Among them, the annual income and gross profit margin of "stator and rotor punching sheet and iron core" are moderately reduced to 425 million yuan and 16.0% (previously predicted to be 540 million yuan and 16.5%), as shown in table 1 of the text.
The level of business internationalization and production automation is improving. According to the previous announcement, since the beginning of this year, the company has implemented the three major development strategies of "internationalization", "informationization" and "automation" in the headquarters of stator and rotor business, formulated the strategic plan of "relying on international customers and domestic factories", and become a global supplier to ABB and other international customers; production process automation improvement has been promoted in an orderly manner. We expect that Fusong Mould, a subsidiary, is expected to be put into production by the end of the year, which will help improve the product quality and delivery cycle of the company's traditional business, improve production efficiency, reduce outsourcing costs and sell to external customers.
Appropriately seek diversified development. The wind power supporting business of the subsidiary "Tianjin Tongda" has geographical advantages and is expected to benefit from the sustainable development of the wind power industry; the rapid development of electrical equipment and mold business will be beneficial to the optimization of business structure to a certain extent; the company signed a "letter of intent" with Hualei Electronics Research Institute in March to cooperate in the field of communication radar. The company has a forward-looking layout in the field of automobile motor, has completed the trial production of automobile motor for BYD, and made achievements in the field of bus motor accessories.
Profit forecast: we expect that from 2014 to 2016, the company's existing business will achieve EPS0.01 yuan, 0.05,0.10 yuan under the current equity, respectively, and the corresponding Pmax E has deviated from the reference range, and the corresponding Pmax B will be 2.62,2.60,2.56 times respectively, maintaining a "neutral" rating. We believe that the smooth development of diversified business will help to open up the room for performance growth.
Risk tips: future downstream market growth may slow down, market competition may become fierce, traditional business performance may not meet expectations; cost and expense control may not meet expectations; business layout and development in new areas may not meet expectations.
