In 2010, the company achieved operating income of 195 million yuan, up 6.83% from the same period last year; operating profit was 30.66 million yuan, down 14.2% from the same period last year; and net profit belonging to the owner of the parent company was 32.65 million yuan, down 11.71% from the same period last year. Basic earnings per share is 0.42 yuan (after adjustment). It was lower than we expected. There is no profit distribution plan.
Performance growth was slightly lower than expected. In 2010, the company's operating income for pressure vessels reached 181 million yuan, an increase of 14.61% over the same period last year, which is basically in line with expectations. The revenue of the company's management equipment reached 12.86 million yuan, a sharp drop of 44.73% compared with the same period last year, resulting in total revenue lower than we expected. We tend to think that the company is subject to capacity bottlenecks and the adjustment of product structure leads to lower-than-expected revenue growth. In the medium term, the chemical industry has basically recovered, the photovoltaic industry is facing new opportunities, the country's efforts to promote the development of the western region are increasing, and the demand for pressure vessels will continue to improve. The company is a leading company in western pressure vessel technology, and it is still worth looking forward to if it can break through the capacity bottleneck in the future.
An increase in gross profit margin. In 2010, the company's comprehensive gross profit margin was 32.65%, up 1.62 percentage points from the same period last year. Among them, the gross profit margin of pressure vessels increased by 3.06% compared with the same period last year, and the gross profit margin of piping equipment increased by 4.99%. We believe that in the context of rising steel prices, the improvement of the company's gross profit margin not only reflects the competitiveness of the company's products, but also reflects the capacity bottleneck on the company's profitability.
The sharp rise in expense rates during the period led to a decline in profits. In 2010, the company's period expense rate was 15.76%, a sharp increase of 5.23%, mainly due to the company's increase in wages and benefits and listing expenses included in management expenses, resulting in a sharp increase in the management expense rate of 4.45%.
Profit forecast and investment rating: we speculate that the company's fund-raising project will be completed by the end of 2011 at the earliest, and the Xinjiang branch will not make any contribution until after 2012. it is estimated that the company's EPS from 2010 to 2012 will be 0.46,0.62 and 0.89 yuan respectively. According to the closing price of 22.97 yuan on March 25th, the corresponding dynamic PE will be 49 times, 37 times and 26 times respectively. We will continue to track the progress of the company's fund-raising projects. For the first time, the company was given a "neutral" investment rating.
Risk tips: (1) the risk that the progress of the fund-raising project is not as expected. 2) the risk of rising prices of raw materials.