Event
The company released its 2008 annual financial report as well as Q1 2009 report on April 29, 2009. In 2008, it reported business turnover of Rmb1359.76mn (+14.76% yoy), total profit of Rmb330.74mn (-10.34% yoy), net profit attributable to parent of Rmb328.85mn (-10.35% yoy), and EPS of Rmb0.31. According to its Q1 2009 report, it realized business turnover of Rmb276.57mn (+10% yoy), total profit of Rmb55.27mn (-3.2% yoy), net profit attributable to parent of Rmb41.48mn (-27.34% yoy), and EPS of Rmb0.04. The situation reflected in the reports is in line with our expectation.
Our Analysis and Estimation
Main influences on 2008 performance:
New cable TV user amount is reported at 0.39mn in 2008, 0.2mn more than that of the past years, which reflects the obvious effect of license fee payment improvement due to digital TV transference.
New depreciation and manual cost mainly lead to gross margin slide of 8.8%.
Public cable network-oriented operation mainly causes negative growth in performance.
When income tax rate is improved to 25% and that capital expenditure maintains high, we forecast 2009 is the most arduous year for the company. 2009 EPS is predicted to be ~Rmb0.23. Suppose cable TV charge in Beijing is improved by Rmb9/door/month in mid-2010, we project its EPS will recover to Rmb0.32.