The company today released its third quarterly report for 2010. In the first three quarters of 2010, the company's operating income and net profit attributable to the parent company were 1.617 billion yuan and 103 million yuan respectively, up 13.0% and 614.4% respectively over the same period last year. The company's single-quarter operating income and net profit attributed to the parent company were 510 million yuan and 20 million yuan, respectively, up 3.51% and 400.47% respectively over the same period last year, and the month-on-month growth was-2.11% and-38.36% respectively. The company's gross profit margin in the third quarter was 19.98%, down 2.21 percentage points from the previous quarter. The company's EPS in the first three quarters is 0.18 yuan. As the third quarter is the off-season of antibiotic sales, the performance is basically in line with our expectations.
The decline in 7-ACA prices led to a decline in the company's overall gross margin in the third quarter, but with the rebound in 7-ACA prices in the fourth quarter and the completion of the company's capacity expansion, future revenue will still be able to support full-year results. The company's gross profit margin decreased significantly in the third quarter, mainly due to the increase in market supply after some 7-ACA manufacturers resumed production, and the decline in downstream demand due to the off-season of antibiotics in the third quarter. With the advent of the peak antibiotic sales season in the fourth quarter, 7-ACA is expected to reproduce the market in the first quarter. We think that the price in the fourth quarter is expected to remain between 800 and 850 yuan / kg. At present, 7-ACA has a market quotation of 900 yuan / kg;. At present, 7-ACA production capacity has doubled to 70-80 tons / month, and product production and sales are booming. We believe that product sales still support the annual performance.
The veterinary drug industry has set a record growth, with an estimated growth of more than 30% for the whole year: due to the rapid rise in the prices of agricultural products, which poses a major test on the costs of feed manufacturers, most of the company's veterinary drug products are currently used as feed additives. we expect the industry to increase the use of fattening agents. in addition, the rise in pork prices has led to an increase in pig stock and feed demand, so the company's veterinary drugs are basically fully produced and sold in October. We expect full-year growth to exceed 30%, and the market is expected to continue into the first quarter of 2011.
Valuation and investment advice: we expect the company's EPS from 2010 to 2012 to be 0.31 yuan, 0.41 yuan and 0.53 yuan respectively, and the net profit growth rate is 383.95%, 30.18% and 29.10% respectively. Combined with the average valuation of the entire pharmaceutical industry, we believe that the reasonable valuation range for 11 years is 25-30 times, and the corresponding stock price is 10.25 RMB12.30 yuan, maintaining the company's "buy" investment rating.