Recently, we visited the company and communicated with relative employees on its current operation status. Our analysis is as follows:
Domestic market demand has not seen substantial upturn yet.
Export uncertainties still exist.
New energy coach indent is hard to reach new high within short term.
Impact from automobile industry restructure in Anhui Province is of limit.
We predict the company’s EPS in 2008-2010E to be Rmb0.08, Rmb0.12 and Rmb0.18 respectively. Based on its current share price of Rmb5.01, dynamic P/E ratio is at 64x, 40x and 28x; valuation advantage is not obvious, and “Neutral” rating is hereby maintained. Investors should focus on variation of market hotspot and to grasp tradable opportunities.
Potential risks: Indent & gross margin of new energy coach and risks of gross margin are out of expectation; overseas market demand downside risk.