Event
The company released its Q1 2009 report on April 25, 2009, according to which it realized business turnover of Rmb514.5bn (+11.49% yoy), net profit attributable to shareholders of parent of Rmb40,894mn (-9.04% yoy), and EPS of Rmb0.23.
Our Analysis and Estimation
Revenue increase is mainly due to capacity expansion.
Cost ascension leads to slide in compound gross margin.
Gross margin touches the bottom; price hike begins to emerge.
Further capacity expansion is ahead.
Potential risks are worthy of attention.
Investment Suggestion
Capacity expansion will be impetus for its internal value acceleration. When the industry is entering into the prosperous phase, effect of capacity expansion might be beyond the market expansion, thus “Recommended” rating is hereby maintained.