1. The company is one of the few with production technology in fully automatic impeller washing machine, tumble washing machine and agitation-type washing machine globally; it covered ~8.5% of domestic market in 2008, being the number two; after split-off of refrigerator assets, the company is wholly engaged in washing machine and related business.
2. Urban area: Governmental policies are likely to help accelerate consumption upgrade.
3. Rural area: Reinforcement of “Home-appliances going to the countryside” policy drives expansion in rural market.
4. The company splits off non-main business assets and targets at mid-high end market.
5. Earning forecast and rating: Series of measures have been taking effect, thus we predict the company’s 2009-2010E EPS to be Rmb0.27 and Rmb0.41 respectively, representing dynamic P/E ratio at 31x and 21x based on closing price of Rmb8.42 on June 2, 2009; considering relatively high estimation, “Neutral” rating is hereby maintained.