The third quarterly report of 2010 shows that from January to September, the company achieved operating income of 121 million yuan, an increase of 24.46% over the same period last year, an operating profit of 30.84 million yuan, an increase of 26.97% over the same period last year, and a net profit of 26.03 million yuan, an increase of 28.02% over the same period last year. Of this, the net profit belonging to the parent company was 26.03 million yuan, up 28.02% over the same period last year, and basic earnings per share were 0.47 yuan.
Of this total, operating income reached 46.81 million yuan in the third quarter, an increase of 18.34% over the same period last year.
The operating profit was 11.98 million yuan, up 17.44% over the same period last year; the net profit belonging to the parent company was 9.9 million yuan, up 9.48% from the same period last year; and the basic earnings per share in a single quarter was 0.18 yuan.
The performance of the main business has increased steadily. The company is mainly engaged in the research and development, production and sales of automatic instruments. From January to September 2010, the company achieved operating income of 121 million yuan, an increase of 24.46% over the same period last year, and 46.81 million yuan in the third quarter, an increase of 18.34% over the same period last year. At the same time, the gross profit level continues to remain high: the company's gross profit margin from January to September was 53.66%, an increase of 4.09 percentage points over the same period last year.
The increase in sales expenses is large. From January to September, the company generated sales expenses of 18.12 million yuan, an increase of 53.74 percent over the same period last year. This is mainly due to the increase of the company's sales staff, an increase of 4.8458 million yuan in wages, benefits, hospitality and travel expenses, and an increase of 1.3454 million yuan in packaging, transportation and service charges in response to the increase in sales.
The development of the fund-raising project is progressing as planned. On August 27th, the company listed on the gem IPO, raising 280 million yuan for the R & D and industrialization project of intelligent instruments, intelligent electric actuators and flow meters. As of the reporting date, the company has invested a total of 32.1574 million yuan into the project, which is faster than the promised progress. Among them, the replacement work of the intelligent instrument project has been completed on September 30, 2010; the intelligent electric actuator and Flowmeter project is implemented by the subsidiary Jiangyin Wanxun. After raising funds in place, the company has injected more capital into Jiangyin Wanxun. Jiangyin Wanxun is going through the industrial and commercial change formalities, and after completing the industrial and commercial changes and completing the procedures for the use of raised funds, promise to replace. The fund-raising project is expected to be available by March 1, 2012.
The coexistence of international cooperation mode and independent mode is the driving force for the development of the company. Under the international cooperation mode, the company chooses foreign small and medium-sized enterprises with core technology as international partners to make use of its advanced technology production or joint research and development with partners and domestic sales to achieve a win-win situation for both sides. This cooperation model is a major feature of the company. In the independent mode, enterprises develop independently and sell under their own brand. From 2006 to 2009, the company's own model product sales accounted for an average of 27.67%, and maintained a compound growth rate of 36%. In the next 3-5 years, the company aims to account for more than 50% of revenue from independent products.
Profit forecast and rating. It is expected that the company's earnings per share from 2010 to 2012 will be 0.53,0.70 and 0.87 yuan respectively, and the corresponding dynamic PE will be 45 times, 34 times and 27 times respectively according to the closing price of 23.54 yuan on October 26th. in view of the high valuation level of the company, we give it a "neutral" investment rating.
Risk tips: 1) the risk of declining demand in the downstream industry of the fund-raising project; 2) the risk of the international cooperation model.