In 2011, HTC realized operating income of 590 million yuan, an increase of 43.6% over the same period last year, an operating profit of 79.7 million yuan, an increase of 100.8% over the same period last year, and a net profit of 69.99 million yuan of owners belonging to the parent company, an increase of 74.6% over the same period last year. Realize earnings per share of 0.46 yuan. The company's distribution plan for this year is RMB2.00 (including tax) in cash dividend for every 10 shares, totaling 30.27 million yuan.

Business income is growing rapidly. The company is one of the leading domestic automobile interior fabric enterprises, mainly engaged in the production and sales of related interior fabrics, as well as the production and sales of medical devices (B-ultrasonic products). The proportion of domestic sales of all businesses reached 64%. During the reporting period, in the complex and changeable market environment, the company's orders maintained a rising trend, the contract execution was good, export sales increased by 52.1% compared with the same period last year, and the sales performance of interior fabrics and medical devices improved. In particular, all the combined tables of Wilder Medical and the part of Baijin Medical have greatly driven the sales performance of medical devices, thus enabling the total revenue to achieve rapid growth. According to the main business, the sales revenue of automobile interior fabrics was 140 million yuan, an increase of 23.9% over the same period last year; the sales revenue of the medical device business was 120 million yuan, an increase of 165.0% over the same period last year; and the sales revenue of the trade business was 190 million yuan, an increase of 98.3% over the same period last year.

The comprehensive gross profit margin keeps growing, and the operating profit increases rapidly. The comprehensive gross profit margin of the current period reached 27.8%, up 5.7% from the same period last year, mainly due to two aspects: first, in terms of raw materials, the purchase price of raw material silk has decreased compared with the same period last year, and at the same time, through the implementation of technological transformation, better avoid the adverse factors of rising fuel prices, so that operating costs are controlled within a reasonable range. Second, from the perspective of downstream sales, the company increased the gross profit margin of the fabric business by 9% year-on-year by optimizing the product structure and other measures, while the higher gross margin level of the medical device business also raised the comprehensive gross profit margin level to a great extent. Although the merger of the two medical device businesses has increased the expenses during the period, due to the relatively low proportion of expenses in income and the increase in interest income after the merger, the operating profit has increased rapidly.

Industrial policy forms a solid foundation for the development of the industry. As a key area mentioned in the 12th five-year Plan of the textile industry, industrial textiles will usher in a larger space for development during the 12th five-year Plan. The support of the textile industry policy, the requirements of the domestic automobile industry to gradually expand and strengthen its own brand and the higher industrial threshold will help the industry leaders represented by the company to improve market coverage. Although the suspension of a series of preferential automobile policies is likely to restrain car sales in the short term, in the long run, with the rapid development of interior fabrics, the change in interior demand brought about by the upgrading of consumption will make the development of interior fabrics gradually get rid of the dependence on automobile sales. We believe that the Twelfth five-year Plan of Textiles and the Twelfth five-year Plan of Industrial Textiles have pointed out the development direction of the automotive textile industry and laid a solid theoretical foundation for the future development of the industry.

Automotive fabrics are the focus, and medical devices are the bright spot: the company strives to increase revenue and net profit by 20% in 2012 compared with the same period last year, and we think this goal should be achieved. We believe that the future development of the company mainly lies in two aspects: first, in the main business of interior fabrics, we should vigorously do a good job in the R & D and sales of automotive interior fabrics and sports functional fabrics, and try to expand to medical and military fabrics. In the first half of last year, the company announced the implementation of an environment-friendly automotive interior fabric project with an annual output of 3 million meters, with a construction period of two years. It is expected that the annual operating income will be 160 million yuan and the total annual profit will be 31.17 million yuan after full production. The original investment project "high-grade warp knitted fabric weaving and printing and dyeing finishing construction project" will be fully put into production by the end of this year if there are no major changes, and it is expected to fully reach production. The production capacity of automobile interior fabric will reach 6.6 million meters and the elastic fabric will reach 2850 tons. We believe that this reflects that the automotive fabric business is still in a key position in the development of the company's business, and it is expected that the launch of a series of new production capacity will effectively increase the market share of related products and strengthen the competitive advantage of the project. The second is to continue to do a good job in B-ultrasound business. Last year, the company acquired Shanghai Baijin Medical device Co., Ltd. with its own funds to further develop the medical device industry and improve the product chain of market segments. Through the continuous upgrading of R & D technology and the gradual expansion of sales channels, further improve the operating performance of the medical device business and the company's comprehensive gross profit margin level. At the same time, the company announced a non-public offering stock plan on the same day of the annual report, which intends to issue no more than 30 million shares to no more than 10 specific objects for the implementation of ultrasonic diagnosis and treatment equipment research and development and related business. We believe that the company's move is intended to continue to expand and strengthen the medical device industry, which is expected to become the second main business. Relying on the favorable industrial policy of the 12th five-year Plan of Medical Devices, the continuous improvement of downstream demand and the competitive advantage of Wilder Medical in the industry, the medical device business will become the "bright spot" of the company's future development., The moderate diversification of the company's business can reduce the impact of systemic risks in the textile and clothing industry on the company's operating performance. In addition, since Kaixing, one of the shareholders, has made an additional restriction commitment not to sell the company's shares until the end of 2012, to sum up, we are cautiously optimistic about the future operating conditions of the company.

Earnings forecast and investment rating: it is expected to achieve earnings per share of 0.63 yuan and 0.93 yuan respectively in 2012-13. According to the recent closing price of 12.26 yuan, the corresponding dynamic price-to-earnings ratio is 20 times and 13 times respectively. Considering the textile industry policy, downstream consumption upgrading is expected to further promote the development of automotive textile business, medical device business to maintain a higher probability of rapid growth, in addition, the company announced on the same day that the net profit of the owner of the parent company increased by 10% in the first quarter compared with the same period last year. 40% year-on-year growth is expected, so the investment rating of "increasing holdings" is maintained. It is suggested that investors should pay attention to the construction of new capacity, the operation of medical device projects and the impact of new industrial policies on related business in the future.

Risk hints: raw material price fluctuation risk; new capacity launch delay risk; medical device project operating performance lower than expected risk; downstream market demand change risk