Revenue grew steadily and net profit fell sharply below expectations before the pre-increase. The company achieved revenue of 940 million yuan in the first half of the year, an increase of 22% over the same period last year, of which the growth rate remained stable in the second quarter. In the first half of the year, the net profit belonging to the shareholders of the parent company was 29.84 million yuan, which fell sharply by 47% compared with the same period last year due to rising costs and increased investment in research and development, which was equivalent to EPS0.074 yuan, which was lower than expected before the pre-increase announcement.
The growth of flat structure is slow, and the growth of white electric structure is by leaps and bounds. In the first half of the year, the revenue of flat panel TV structures increased by only 3%. In addition to the slow growth of the downstream TV industry, but also affected by the general performance of major customers Haier and Konka in the whole machine market, the revenue of flat panel TV structures grew by leaps and bounds, and the total revenue of empty ice washing structures increased by 160%, accounting for 30% of the income ratio, up from 14% in the same period last year. The revenue of automobile structural parts fell by 15% in the first half of the year, which is mediocre, but it is still one of the future development directions of the company.
Gross profit margin fell, R & D investment increased significantly, and the speed of asset turnover slowed down. The gross profit margin in the first half of the year was 17.3% (- 1.3%), mainly due to the rising cost of raw materials and sluggish downstream demand, which led to the slow launch of new products of color TV structural parts, and the substantial expansion of the scale of white electricity structural parts to accept orders with lower gross profit margin. The company's sales expense rate remained basically stable in the first half of the year (2.7%), but the management expense rate rose rapidly to 9.8% (+ 3.3%) due to a sharp increase in R & D investment. The operating cash flow in the first half of the year is-100 million yuan. The increase in the reserve of accounts receivable and raw materials and the slow shipment of structural parts of color TV make the speed of asset turnover slow.
The transformation with DMS mode as the core is in progress. DMS as the core, based on black electricity to other areas of breakthrough is the company's main development direction. The black electricity field company will continue to strengthen the cooperation with the leading domestic brands (such as Skyworth), while the white power field still needs to be cultivated because of the strong DMS model of the whole machine factory. The continuous R & D investment in new business, new technology and new technology (especially in the automotive field) will be a strong guarantee for the company's business development.
Risk factors: White electricity and automobile business expansion is slow; R & D investment is not effective; customers are more concentrated.
Profit forecast, valuation and investment rating: the company's strategic transformation direction is clear, expansion and income increase shows certain results, but due to the substantial increase in R & D investment, the performance in the first half of the year is lower than expected. Considering that R & D investment is necessary to achieve transformation and growth, it is expected that the follow-up investment will still be large. We downgrade the company's 2011-13 EPS forecast to 0.19 PE 0.26 yuan 0.33 yuan (the original forecast 0.39 pound 0.45 pound 0.54 yuan), the current price corresponds to the 2011-13 PE valuation level on 46-34-27, the valuation is relatively high, downgraded to "hold", waiting for investment opportunities when the transformation and R & D investment results appear.