Event
According to the 2008 annual report, the company gained operating revenue of Rmb2.136bn (+46.71% yoy), net profit attributable to parent of Rmb129mn (+26.25% yoy) and EPS of Rmb0.456.
Our Analysis and Estimation
The company’s performance is in line with our expectation; traction transformer and network power mainly drive performance growth.
Increase in trade income proportion reduces gross margin.
The company will continue to adopt steadfast financial policy.
Viewing from current business, special transformer and network power will still be the main driving force of performance growth.
Investment Suggestion
We predict 2009-2010E EPS at Rmb0.54 and Rmb0.71, representing P/E ratio of 20x and 15x. As advantageous industry of electrical equipment manufacturing in China, many opportunities can be searched in this industry. By intensive growth and extensive expansion, the company is expected to become an enterprise with international competitiveness in electrical equipment manufacturing and service. Thus, we maintain “Cautious” rating for the counter.