Event description

Sunflower released the 2013 interim report, during the reporting period, the company achieved operating income of 517 million yuan, down 15.54% from the same period last year; the net profit attributed to the parent company was 29.37 million yuan, and the EPS was 0.06 yuan. Among them, the operating income in the second quarter was 262 million yuan, down 30.59% from the same period last year; the net profit attributed to the parent company was 18.76 million yuan; the EPS in the second quarter was 0.04 yuan, and that in the first quarter was 0.02 yuan.

In the medium term, the company plans to use the capital provident fund to increase 12 shares for every 10 shares without cash dividend distribution.

Event comment

The shrinking markets in Europe and the United States have led to a decline in income, and the development of Japanese and domestic markets has gradually achieved results. In the first half of the year, due to the decline in overall demand in the United States and Europe, as well as the decline in component prices compared with the same period last year, the company's revenue in Europe and the United States shrank significantly, with overseas revenue down 32.30% from the same period last year, resulting in a 15.54% drop in total revenue from the same period last year. At the same time, the company increased the development of overseas emerging markets and domestic markets, passed the Japanese JET certification in the first half of 2013, and signed a 40 MW crystal silicon solar module sales contract with NextEnergy; the domestic market achieved revenue of 110 million yuan, an increase of 2311.66% over the same period last year. The development of emerging markets is beginning to bear fruit, and the Japanese and domestic markets are expected to lead to improved revenue in the second half of the year.

The first-half net profit came from the sale of the power plant and the reversal of the falling price of inventory. In the first half of the year, the company realized a net profit of 29.37 million belonging to the parent company, of which the profit from the sale of the two power stations held by the subsidiary Luxembourg was 7.8 million yuan, and the falling price of inventory was prepared to return to 45.75 million. The main reasons for the profit improvement were the sale of power stations and the reversion of inventory prices.

In the second quarter, revenue fell slightly from a year earlier, while net profit improved. In terms of quarterly revenue, the second quarter of this year was the peak sales season, but the company's revenue fell 30.59% from the same period last year, up 2.53% from the previous year, mainly due to the decline in the number of the company's exports to European and American markets and the decline in component prices compared with the same period last year. The improvement in net profit from the month-on-month increase in component prices and the reversal of inventory prices.

The power plant business continues to advance, and the domestic and Japanese market development is the main focus in the second half of the year. In March 2012, the company announced the construction of 150MW photovoltaic power station in Yunnan; in March this year, the company invested in 25MW photovoltaic power station in Romania. The company has been selling power plants since the second half of 2012, boosting profitability on the one hand and activating funds for sustainable power plant development on the other. The imminent landing of the photovoltaic policy is expected to drive the domestic installation scale to exceed 8GW for the whole year, and the company's supply contract with Japan's NextEnergy will also be implemented in the second half of the year, which is the main source of growth for the company in the second half of the year.

Give a rating of "cautious recommendation". Excluding the increase in equity for the time being, the company's EPS from 2013 to 2015 is expected to be 0.14,0.16,0.23 respectively, corresponding to the current share price PE of 86,80,53 times, which is cautiously recommended.