In Q1 2009, the company reported business turnover of Rmb3813mn (+6.43% yoy), operating profit of Rmb262mn (+15.45% yoy), net profit attributable to shareholders of listed company of Rmb199mn (+53.83% yoy), and basic EPS of Rmb0.15.
Earning forecast and rating: When fundamental situations turn up, market proportion of the company’s main brand products improves and real income tax rate is expected to drop; we forecast its 2009-2010E EPS to be Rmb0.78, Rmb0.92 and Rmb1.05, representing dynamic P/E ratio at 31x, 26x and 23x based on closing price of Rmb23.92 on April 29, 2009. “Neutral” rating is hereby maintained.
Potential risks: 1) Big-cap fluctuation; 2) Fierce industry competition and decline of market share, and 3) Cost ascension of raw materials.