Event Comment
First, the price competition in high-voltage frequency converter industry dragged down the gross profit margin, and the management expenses in the second quarter decreased by 40.73% year-on-year .
The company's operating income increased by 15.17% year-on-year; gross profit margin also declined from 35.63% in the first quarter to 35.57% , mainly due to the fact that the price competition in the general-purpose inverter market has caused price growth to slow down and the operating cost has increased by 35.55% over the same period of last year . , but also by the company's lack of capacity.
Operating profit was 33,248,500 , a year-on-year decrease of 5.98% . Sales expenses increased by 88.79% compared with the same period of last year, which was mainly due to the increase in sales scale and enhanced marketing efforts in the report period; it is worth noting that the administrative expenses decreased compared with the same period of last year 18.16% , and the company's quarterly report also showed a year-on-year increase of 30.53% , mainly due to the increase in R&D investment during the reporting period, and the corresponding increase in R&D expenses.
Second, the non-operating income increased significantly, and the operating cash inflow matched well with the sales scale
The company’s non-operating income in the first half of the current period was RMB 9,064,457.85 , an increase of 134.26 % year-on-year, which was mainly due to the increase in government special subsidy and software VAT rebates received by the company during the period.
In the first quarter, the company's operating activities generated a cash inflow of 10.1030 million yuan, up 20.02% year-on-year; the net cash flow from operating activities was -410.1077 million. The growth rate of cash inflow from operating activities was higher than the growth rate of sales revenue. We believe that Cash can be withdrawn reliably, and the quality of accounts receivable is good.
Third, after the fierce competition, the high-voltage frequency inverter industry will reshuffle or unexpectedly
The first half of 2010, the company achieved total sales orders for 476 units, up 97.51 percent over the previous year; the order amount 304.964 million yuan, an increase of 23.20 percent over the previous year, the average single price of 640,700 yuan, the price in the first quarter 71.26 The average unit price of ten thousand yuan has further declined. We believe that the most important reason is due to the fierce price competition in the industry.
The high profit margin of high-voltage frequency converters and the promotion of energy saving and emission reduction by the state have led more and more companies to enter this market. Incomplete statistics show that only A- share listed companies have Ke Lu Electronics [18.91 -1.66%] . Guodian Nanzi [18.59 0.60%] , Dongfang Electronics [4.96 -1.20%] and other companies are entering this industry. The current market price competition is fierce, and the high-voltage inverter 361 sales model accounts for serious losses. These two factors combine Now that the technology is mature, the cost is controllable, and companies that hold a lot of funds at the same time can deal with market competition. We believe that with the high growth of the high-voltage inverter industry, the industry reshuffle may come unexpectedly.
Fourth, EMC's sales ratio increased significantly
From the distribution of the top five customers in the first half of the company, if the Russian market's centralized calculation is not taken into consideration for the time being, according to the company's mid-year report, the top two customers are Liaoning Saiwo Si Energy Saving Technology Co., Ltd. 12.28% of the company's operating revenue. Liaoning Saiwosi Energy Saving Technology Co., Ltd. is a contracted energy management (EMC) service provider specializing in high-voltage inverters. In the past, the company took into account excessive sales expenses and accounts receivable balance, using EMC sales are relatively small.
The "Opinions on Accelerating the Implementation of Contract Energy Management and Promoting the Development of Energy-Saving Service Industry" formulated by the National Development and Reform Commission, led by the National Development and Reform Commission, has been basically completed. The contract energy management project is expected to be included in the service tax category, so as to enjoy preferential tax deduction. EMC Model Will be greatly developed under the background of national energy conservation and emission reduction. The company's increased emphasis on EMC will help product promotion and expand market size.
In spite of this, national ministries and commissions have increased their support for contract energy management. However, considering the domestic legal system, the financial environment and EMC are not well coordinated. We still need to fully recognize the company's EMC sales receivables. Quality problems.
Fifth, the key to performance breakthrough is the completion of investment projects as soon as possible.
The company fully promoted the implementation of the raised capital project. The initial stage of the project was 1,200 sets of production capacity and it could reach 1,500 units in the future. At present, the company's production capacity is tight. The investment project will not only enable the company to further expand its sales scale, but also help the company reduce its production costs and improve its products. Gross margin to respond to the increasingly fierce market competition.
Recently, the company announced the use of over-raised funds and invested 21,180,000 yuan to build a high-voltage inverter production R&D base in Wuhan Donghu New Technology Development Zone with a designed capacity of 600 units. After the completion of the above project, the overall design production capacity of the company's high-voltage inverter will reach an annual output 1,800 units, which will have a significant increase over the current 500 units of design capacity.
Taking into account the company's financial advantages and production capacity, we believe that the short-term company's market share expansion is not a problem, the release of production capacity as the key to performance breakthroughs. Long-term still faced no small marketing risks.
Sixth, the equity incentive draft demonstrates the confidence of the management, but at present it does not seem too optimistic
According to the draft, require the company to meet the growth rate of not less than 30%, if the press-year 2009 growth of 30%, the net profit in 2010 should be 91.49 million; if in accordance with the 2010 net assets of not less than 8%, the net profit approximately 1.05 trillion, while in the first half net profit of 37.609 million, taking into account the shares of restricted stock as a pay-based pay equity, it should be reflected in the financial statements at fair value in accordance with the amortization period to take effect at the time of grant, per year About 11.895 million yuan in amortization will put pressure on performance. We think it seems that the company's goal of completing equity incentives is still arduous.
We expect the EPS for the 10-12 years to be 0.79 , 0.91 , and 1.30 yuan respectively. The corresponding P/E ratios are 50 , 44 , and 31. We suggest that we pay attention to the company while paying attention to several risks: single market, price competition, and EMC. The quality of sales returns, marketing pressure brought about by capacity expansion.