In the first three quarters of 2013, the company achieved operating income of 830 million yuan, down 1.67% from the same period last year; operating profit of 209 million yuan, up 70.38% from the same period last year; net profit belonging to the owner of the parent company was 152 million yuan, up 80.92% from the same period last year; and basic earnings per share was 0.33 yuan.
Equity transfer boosted performance. The company is mainly engaged in guarantee, leasing, pawn, trade financing, portfolio financing, financing consulting, investment consulting and insurance brokerage and other businesses. Its holding subsidiaries are mainly engaged in domestic trade Xiangyi Jinlian (70%), Yuantai pawn (82%) and Xiangyide pawn (78.7%) and so on. The largest shareholder is Zhejiang Tobacco Investment Management Co., Ltd., with a shareholding ratio of 12.04%. The actual controller is Zhejiang Province, China National Tobacco Corporation. In the first three quarters of this year, the company's revenue fell 1.67% compared with the same period last year, while net profit increased by 80.82% year-on-year, mainly because, on the one hand, the company's profitability improved, with gross profit margin rising 4.4% to 26% year-on-year; on the other hand, equity transfer improved the company's investment income. In June 2013, the company signed an equity transfer agreement with Shangrao Zhongda property Development Co., Ltd. to transfer 65% of its stake in Shangrao Dahongying Real Estate Co., Ltd. to Zhongda property Company at a transfer price of 61.75 million yuan.
The potential risk is rising. During the reporting period, the company's loan assets totaled 1.196 billion yuan, of which the normal assets were 724 million yuan, accounting for 68.47%, down 8.61% from the beginning of the period; suspicious assets were 328 million yuan, accounting for 31.04%, up 9.12% from the beginning of the period, and the potential risk increased.
Benefit from financial reform. The company's core competitive business includes financial business such as guarantee, leasing, pawn, entrusted loan business and so on. The innovative R & D ability of financial products and the continuous improvement of anti-risk ability are the necessary means to achieve success in the future industry homogenization competition. The company focuses on studying the new approach of mortgage-based risk control to the combination of process control and pledge, and strives to promote the construction of financial business market system. With the deepening of financial reform, companies in the future are expected to benefit from the relevant policies introduced by the government.
Profit forecast and investment rating. We expect the company's earnings per share from 2013 to 2015 to be 0.38,0.39 and 0.46 yuan respectively. According to the company's latest closing price, the corresponding dynamic price-to-earnings ratio is 26 times, 25 times and 21 times respectively, maintaining the investment rating of "overweight".
Risk hint. 1. Industry competition risk. 2. The risk of loan default.