Event
The company issued 2008 annual report on April 9, 2009, according to which it realizes business turnover of Rmb15529mn (+2.41% yoy), operating profit of Rmb1293mn, which is equal to that of the previous year, net profit attributable to parent of Rmb1075mn (+11.1% yoy), and diluted EPS of Rmb0.52, which is slightly below our expectation. Average annual ROE is ~10.24%, which is equivalent to that of the past three years.
Our Analysis and Estimation
2008 performance grows steadily on the whole, however, violent fluctuation still exists viewed from quarterly performance.
Stocks are excessive at 2008 yearend.
Forest wood value suffers short-term depreciation, yet long-term valuation is still expected.
Its profitability recovers in Q1-Q2 2009.
Investment Suggestion
Our earning forecast to the company is corresponded with the report issued previously. Its 2009-2011E business turnover is forecasted to be Rmb1421mn, Rmb1614mn and Rmb1828mn respectively, net profit to be Rmb919mn, Rmb1088mn and Rmb1294mn separately, and EPS to be Rmb0.45, Rmb0.53 and Rmb0.63. Meanwhile, dynamic P/E ratio for the corresponding period is forecasted at 17.18x, 14.25x and 12.2x, with 2008 PB at 1.29x. “Cautious” rating is hereby maintained.