In 2008, the company reported business turnover of Rmb3,311mn (+4.52% yoy); net profit attributable to parent of Rmb254mn (+28.23% yoy), and EPS of Rmb0.50, which is basically in line with our expectation of Rmb0.49. According to its dividend distribution plan, the company sends pre-tax cash of Rmb0.80 for every ten shares.
According to earning forecast, the company’s 2009-2010E EPS are Rmb0.60 and Rmb0.83, representing P/E ratio of 13x and 19x, which provides advantages for its valuation. Owning to industry rebound and main product advantage as well as new production in future, the company is potential in the long term. We hereby upgrade its rating to “Overweight”. Meanwhile, investors should also pay attention to potential risks due to uncertainties of macro-economy.