Event
According to its 2008 annual report issued today, the company realized business income of Rmb1419.5479mn (-66.27% yoy), operating profit of Rmb295.918mn (-71.13% yoy), and net profit of Rmb210.6401mn (-68.02% yoy), among which the real estate sector reported total annual sales income of Rmb1217.815mn, accounting for 85.79% of the company’s business income (-70.11% yoy). Basic annual EPS was reported at Rmb0.09.
Our Analysis and Estimation
The company’s performance in 2008 declined by over 50%, far below the earning forecast made by the company when acquiring its assets of controlling shareholders in January 2008. Net profit only realized 13.8% of the forecast. As far as we are concerned, main reasons are as follows:
Its performance was substantially influenced by the market due to its over-reliance to a single project.
Its project reservation of concentrating the most to a few big-caps
Its financing plan was not implemented smoothly last year.
Investment Suggestion
In accordance with the company’s project presale status and progress, we predict that its real estate turnover in 2009 will mainly be sourced from Beijing Oceanwide International Community and Shenzhen Oceanwide Lafei Garden with turnover of main business of Rmb1.21bn, net profit attributable to parent of Rmb367mn, and diluted EPS of Rmb0.16. we hereby keep rating of the counter suspended.