The company today announced its 2009 annual report that the company's operating income for the whole year of 2009 was 368 million yuan, down 19 percent from the same period last year; operating profit was 3.91 million yuan, down 81.3 percent from the same period last year; profits attributed to the parent company were 2.88 million yuan, down 83.7 percent from the same period last year; and earnings per share were 0.01 yuan.
No distribution, no increase in 2009.
Gross profit margin rose sharply in the fourth quarter. In 2009, the industry boom gradually rebounded from the downturn, and the domestic and foreign market demand fell in the first half of the year, and the number of orders and sales revenue decreased sharply, resulting in a 19% drop in revenue compared with the same period last year. The fall in product prices and underutilization led to a 4.6% year-on-year decline in gross profit margin to 9.72%. In addition to a certain increase in single-panel gross profit margin, both double-panel and multi-panel declined by about 6%. Driven by policies to stimulate domestic demand such as home appliances going to the countryside in the second half of 2009, the company's orders were gradually sufficient, of which the operating income in the fourth quarter was 107 million yuan, which was basically the same as the previous quarter, while the gross profit margin increased by 14 percentage points to 20.3% from the previous quarter. It is judged that the increase in the operating rate and the price increase of products are the main reasons for the sharp increase in gross profit margin in the last quarter.
The rate of expenses decreased slightly during the period. In 2009, the period cost was 30.26 million yuan, and the period expense rate was 8.23%, a decrease of 15.52 million yuan compared with the same period last year, of which the financial cost decreased by 9.98 million yuan, mainly because there were more exchange losses in 2008, while the RMB exchange rate remained stable in 2009. Only 600000 yuan in financial expenses.
The HDI project will contribute to performance in 2010. The construction of the high-density multilayer interconnection printed circuit board (HDI) of the fund-raising project has entered the final stage, the certification work has been fully carried out, and some customers have expressed their recognition of the HDI production line and their willingness to cooperate further. The HDI board is mainly used for mobile phones, accounting for about 50% of the total usage, while other demand mainly comes from consumer products such as IC, notebook computers, digital cameras, GPS, etc.
The profitability of HDI board is higher than that of the company's existing business. The company's current major customers Motorola, Nokia, Samsung Electronics, Hisense and so on are expected to become potential customers of HDI in the future. However, considering that the HDI board is a new technology, the company has no production experience, so whether the company can quickly achieve capacity climbing and improve the rate of quality is a major challenge for the company. We expect the HDI project to achieve stable mass production in mid-2010, and it is estimated that HDI will contribute 150 million yuan and 290 million yuan in 2010 and 2011 respectively, bringing net profit of about 12 million yuan and 41 million yuan, respectively.
Earnings forecast: we expect the company's earnings per share in 2010 and 2011 to be 0.13 yuan and 0.26 yuan respectively. At current prices, the dynamic price-to-earnings ratio in 2010 and 2011 is 71 times and 36 times respectively. In view of the high valuation, maintain the company's "neutral" investment rating.