The company issued its Q1 2009 report, according to which it realized operating revenue of Rmb123mn (+41.59% yoy), operating profit of Rmb24.71mn (+61.60% yoy), net profit attributable to parent of Rmb20.94mn (+88.73% yoy) and basic EPS of Rmb0.20. In addition, the company forecasted its net profit attributable to parent to see over 50% surge in 1H2009.
Potential risks: 1) Raw material price fluctuation; 2) Domestic increasingly fierce competition. We maintain our forecast and predict its 2009-2010E EPS to be Rmb0.88 and Rmb1.11 respectively, representing dynamic P/E ratio at 44x and 35x based on closing price of Rmb38.56 on the previous trading day; given its rapidly growing main business and well-controlled cost, “Overweight” rating is hereby maintained.