Event:
As shown in its 2008 annual report, the company realized main business turnover of Rmb834.2085mn (+52.95% yoy), operating profit of Rmb90.3063mn (+67.15% yoy), net profit of Rmb43.0732mn (+5.03% yoy), net profit deducted non-recurring profit & loss of Rmb77.4620mn (+81.48% yoy), basic EPS of Rmb0.13 and EPS deducted non-recurring profit & loss of 0.23.
Our Analysis and Estimation:
1. Consumers growth and scale of conversion to digital TV are in line with expectation;
2. Performance analysis;
3. Our core assumption is being verified gradually;
Investment Suggestion:
We lower the company’s 2009-2010E EPS to be Rmb0.31 and Rmb0.50 respectively. Considering its weak periodicity and high development (CAGR at 77% in the coming three years), “Recommended” rating is hereby maintained.
Major Risks:
1. The company does not enjoy preferential income tax rate;
2. Expenditure and period expense are higher than expectation, of which, expenditure is mainly in two-way reconstruction and investment in non-operating business; period expense is embodied in labor costs.