For first half of 2008, the company realized turnover of Rmb14240mn (+33.79% yoy), operating profit of Rmb317mn (+22.93% yoy), net profit attributable to parent of Rmb18.8mn (- 90.24% yoy), and diluted EPS of Rmb0.01.
The company’s integrated gross margin reported a year-on-year up of 4.82% to be 17.11% due to its smooth development in the core businesses. Expansion of profitability can be mainly attributed to fast increase in refrigerator and mobile phone business, as well as expansion of consolidated statement.
Expansion of consolidated statement had greatly improved the company’s period expense while annexed the newly increased gross profit of the core businesses. The “5.12” Wenchuan earthquake had caused total losses of Rmb1500mn to its non-operating expenses in terms of assets, maintenance, etc., which in turn dragged the company’s performance.
We forecast the company’s EPS in 2008-2010 to be Rmb0.14, Rmb0.30 and Rmb0.39 respectively, representing P/E ratio at 27x, 13x and 10x separately. Estimation in 2008 is in a high level among all the listed appliance companies. Given the above analysis, “Neutral” rating for the counter is intact.