Event
The company issued 2008 annual report, according to which it realized turnover from main business of Rmb27.9bn (+12.30% yoy), net profit of Rmb176mn (-91% yoy), and diluted EPS of Rmb0.20. Besides, the company distributed Rmb0.2 cash dividend for every ten shares.
Our Analysis and Estimation
2008 Performance is below our expectation.
Growth of thermal power business is beyond our expectation, and revenue from wind power business is confirmed below expectation.
Gross margin drastically declines, and improvement space still exists in the future.
Indent structure greatly improves; nuclear power and wind power business are likely to become growth points.
Investment Suggestion
We are optimistic with the company’s prospects in nuclear power and wind power business, and we think they are affordable to thermal power decline and will enable the company’s performance growth. Its 2009-2011E EPS is forecasted to be Rmb2.54, Rmb3.10 and Rmb3.74 respectively. Given the current attractive share price, we hereby upgrade the rating to “Recommended” for the counter.