Event:
The company announced 2008 annual report on April 13, 2009, according to which, it realized operating revenue of Rmb1.908bn (+30.81% yoy), operating profit of Rmb373mn (+56.02% yoy), net profit attributable to parent of Rmb224mn (+35.4% yoy) and diluted EPS of Rmb0.52, which was below our forecast of Rmb0.54.
Our Analysis and Estimation:
Revenue and profit ascended owing to contribution from M&A projects.
Gross margin prominently boosted in 2H2008.
M&A drastically promoted the company’s reputation.
Investment Suggestion:
We forecast 2009-2011E operating revenue to be Rmb2.415bn, Rmb2.684bn and Rmb2.833bn, net profit to be Rmb321mn, Rmb367mn and Rmb389mn, and EPS to be Rmb0.75, Rmb0.86 and Rmb0.91 respectively, representing P/E ratio at 21.4x, 18.8x and 17.7x. 2008 PB is 3.9x and we maintain “Cautious” rating for the counter.