According to its 2008 annual report issued today, the company realized business turnover of Rmb1.047bn (-49.51% yoy), net profit attributable to parent of Rmb271mn (-8.98%), and EPS of Rmb0.45, which was slightly below our expectation. Besides, the company distributed pretax cash dividend of Rmb0.5 and additional 5 shares for every ten shares.
Our Analysis and Estimation
Performance declines due to settlement area reduction, yet gross margin of settlement goes up by 1ppt than that of the previous year.
Xishanhuafu is the main source of profit in the coming two years.
2009 performance is basically stable and gross margin is to stay in a high level. 2010 performance is likely to be influenced by the market greatly.
Through business shrinkage and strategy of “cash being the top”, financial status maintains stable.
Investment Suggestion
We predict the company’s business income in 2009 to be Rmb2bn, net profit attributable to parent of Rmb279mn, and EPS of Rmb0.46. “Cautious” rating is hereby maintained. Potential risks: Product species is single and susceptible to the market performance.