In 2008, the company reported business turnover of Rmb1653mn (+88.56% yoy), net profit attributable to parent of Rmb153mn (+72.50% yoy), and diluted EPS of Rmb0.54, which was in line with expectation. According to its dividend distribution plan, it was to send pretax cash of Rmb1 for every ten shares with no share addition & transference plan.
We forecast its 2009-2010E EPS to be Rmb0.61 and Rmb0.76, representing P/E ratio at 20x and 16x based on closing price of Rmb12.08 on April 3, 2009. Given domestic brand & marketing advantages, “Overweight” rating is hereby maintained.
Potential risks: Systematic risks of the big-cap; income acceleration and gross margin might be under expectation due to the bearish economic status.