From January to September 2009, the company achieved operating income of 1.041 billion yuan, an increase of 47.93% over the same period last year; operating profit of 53 million yuan, an increase of 94.15% over the same period last year; net profit belonging to the owner of the parent company was 41 million yuan, an increase of 98.93% over the same period last year; and basic earnings per share was 0.13 yuan.
During the period, the decrease of expense rate and the increase of investment income are the main reasons for the sharp increase in operating profit. The company's business is mainly design and construction, real estate, tourism and catering services. During the reporting period, the company achieved a gross profit margin of 17.22%, down 4.75 percentage points from the same period last year. During the period, the expense rate was 10%, down 3.61% from the same period last year, of which the sales expense rate was 2.01% lower than the same period last year. The investment income was 23 million yuan, an increase of 88.49% over the same period last year, mainly due to the increase in equity transfer income and investment income of associated enterprises of Sanya Tongji Science and Technology Park Co., Ltd.
Subsidiary equity transfer, the company to achieve a larger return on investment. During the reporting period, Shanghai Tongji Science and Technology Park Co., Ltd., a holding subsidiary of the company, signed the Equity transfer Agreement and the debt compensation Agreement with Sanya Yuantai Real Estate Development Co., Ltd. Sanya Yuantai transferred the entire equity of Sanya Tongji Science and Technology Park Co., Ltd. with 10 million yuan. At the same time, Sanya Tongji Science and Technology Park Co., Ltd. repaid all the debts to the Science and Technology Park. The transfer of equity was completed on July 27; on August 3, the Science and Technology Park received all the equity transfer, loan principal and interest. This transfer, the science and technology park generated investment income of 9.4 million yuan, of which equity transfer income of 2.4 million yuan, long-term investment impairment is prepared to rush back 7 million yuan.
Jointly contribute to the establishment of a hotel management company, the company or gradually carry out the hotel management industry. During the reporting period, the company and Tongji University Architectural Design and Research Institute Co., Ltd. jointly funded the establishment of Shanghai Dishun Hotel Management Co., Ltd., the company contributed 25 million yuan, accounting for 25% of its equity. On October 16th, in order to invigorate the stock of real estate and occupy funds, the company plans to sell the D building of Union Plaza to Shanghai Dishun Hotel Management Co., Ltd. at a price of about 240 million yuan.
Profit forecast and rating. We estimate that the EPS from 2009 to 2011 will be 0.16,0.18,0.20 yuan respectively. At the price of 8.44 yuan on October 31, 2009, the company's dynamic price-to-earnings ratio is 52 times, 47 times and 42 times respectively, maintaining a "neutral" investment rating.
Risk hint: the risk brought by the decline of gross profit margin; the risk that the company gradually develops the hotel management business.