Storage Battery to Become the Main Source of Income
Company realized operating income of 1.668 billion Yuan, up 36.43 percent, to achieve operating profit 33.327 million Yuan, net profit attributable to shareholders of listed companies 27.065 million Yuan, respectively, an increase of 174.78 percent and 219.74 percent.
Faster revenue growth, gross profit margin fell slightly. Company in the first half operating income 1.668 billion Yuan, up 36.43 percent, car battery production and sales volume reached 4.83 million, respectively, and 4.94 million, but operating costs increased by 39.17%, slightly higher than revenue, the company’s consolidated gross margin was slightly down 0.85 percentage points to 11.37%, of which the battery product gross margin 11.69%, down 1 percentage point. We believe that growth in the first half year performance of the main beneficiaries of substantial growth in car sales, car sales in China were completed during the first half 8,927,300 and 9,016,100, respectively, an increase of 48.84% and 47.67%, but the car is worth noting that in recent months chain sales declined year on year growth rate started to slow down in the second half growth may slow down performance.
Battery business income accounted for 91.60%, the slow development of other businesses. Battery business has been the company’s main source of income, in 2008 accounting for 85% of income, then increasing every year. The current car to start with a lead-acid battery production scale of 10 million, while there are 5 million construction maintenance-free sealed lead-acid batteries, is expected to reach capacity by the end of 2011. Industrial lead-acid battery production capacity 1 million KVAh, the company’s own capital to build 3 million KVAh still under construction, is expected to reach capacity by 2012. Lithium project operation is still not ideal, loss of 6.36 million Yuan; the main problem is low quality standards. Is a lead-acid battery industry’s leading enterprise segment, but development of the industry point of view, the new battery on the battery replacement is inevitable, the company must be in a stable where the main industry, and actively develop new battery, to open up new profit growth point .
Mineral resources may be a surprise. The company bought in 2007 Hongling word and County South section three exploration, preliminary survey of the gold reserves of 10.2 tons, 1550 tons of silver, lead, zinc total 870,000 tons, of which the word and Hongling has commissioned a detailed survey professional exploration agencies, but not the results, mineral resources, future company performance may be a surprise.
According to our earnings forecasts, without considering the value of mineral resources from 2010-2012 EPS was 0.17 Yuan, 0.23 Yuan and 0.25 Yuan, the current stock price times the corresponding PE were 86,63,58, giving neutral ratings.