Description of the event
Jiangsu Tongrun released its 2012 performance forecast today. During the reporting period, the company achieved operating income of 882 million yuan, an increase of 607% over the previous year; achieved net profit attributable to the parent company of 46 million yuan, an increase of 2.29% over the previous year; and achieved EPS of 0.18 yuan.
The fourth quarter achieved operating income of 240 million yuan, an increase of 19.87% over the previous year; net profit attributable to the parent company was 0.4 billion yuan, an increase of 35.02% over the previous year. EPS was 0.04 yuan in the fourth quarter and 0.06 yuan in the third quarter.
Incident comments
The operation was stable throughout the year, and revenue and net profit increased year-on-year: the company's main products were high and low voltage switch cabinets and tool boxes, which are the leading tool box companies in Asia. Due to the European debt crisis, demand for tool boxes, the company's main export product, continues to be sluggish, and orders have declined somewhat. Revenue from this part of the business is expected to decline year-on-year. However, the company's other major product, the high and low voltage switchgear, benefited from increased domestic demand for power equipment and the release of production capacity. Revenue increased year-on-year, which ultimately led to a slight increase in the company's revenue.
Revenue increased month-on-month in the fourth quarter, and the decline in net profit may be due to a decline in gross margin: due to order settlement and seasonality, the company's revenue for the fourth quarter of each year declined month-on-month, and the company's revenue for the fourth quarter of this year not only continued the previous trend of recovering year-on-year growth, but also achieved clear positive month-on-month growth. Possible reasons include: 1. With the advancement of domestic high and low voltage transmission and distribution grid construction, the company's orders for high and low voltage switchgear products increased; 2. The release of additional production capacity led to an expansion in the company's production and sales scale. This can be obtained from the company's recent inventory data that has clearly increased Verification; 3. Integration The company's high inventory level in the 3rd quarter does not rule out the possibility that settlement of some of the company's recent orders will be delayed until the 4th quarter.
The prices of the company's main raw materials, steel and copper, both rose in the fourth quarter. Under the order production model, rising costs may cause the gross margin of the company's products to decline, leading to a month-on-month decline in the company's operating profit and net profit.
It is expected that the restructuring of the industry will bring about further profit growth: the company signed a comprehensive cooperation agreement with the PV System Engineering Research Center of the Ministry of Education in July 2011. Currently, the two have successfully tested the development and trial production of photovoltaic grid-connected inverter products, and the company will also speed up the development and trial production of photovoltaic inverter prototypes. Entering the new energy industry will further improve the company's product structure and bring new growth points to the company.
The company's EPS is expected to be 0.18 yuan and 0.25 yuan respectively in 2012 and 2013, maintaining the “recommended” rating.