For first three quarters of 2008, the company reported total business turnover of Rmb19123mn (+5.65% yoy), operating profit of Rmb1140mn (-48.10% yoy), net profit attributable to parent of Rmb760mn (-59.72% yoy), and EPS of Rmb0.93. Thereinto, net profit attributable to parent and EPS in Q3 was Rmb317mn (-60.40% yoy) and Rmb0.39 respectively. Despite the ruinous earthquake of May 12, its year-on-year operating income still slightly increased. It is estimated that straight losses on assets will not be more than Rmb1600mn, among which the current losses of fixed assets is Rmb308mn, and the rest will be finalized earlier the year-end. Orders at hand are totaled ~ Rmb120bn, of which over 30bn goes to wind power & nuclear power sectors, while the annual increased orders will be around Rmb60bn. Although thermal power equipments have already saturated in demand, due to strong counter-cyclical capacity of the company, orders within the sector are still totaled ~Rmb78bn, which will bring the current year 4x sales income of that in 2007.
We forecast its 2008-2010E EPS be Rmb0.67, Rmb2.53 and Rmb3.44 respectively, representing P/E ratio of 26x, 7x and 5x separately; although its performance was weakened by the 5.12 earthquake, being a bellwether of the wind power & nuclear power industry, it is still worth long-term investment, and we hereby give "Overweight" rating for the counter.