Dehao Runda: Small Appliances Resume Growth LED Business Expands
The company achieved operating income of 1.07 billion yuan, a year-on-year increase of 55.4% (second quarter revenue of 630 million yuan, an increase of 56.3%). In the first half of the year, the net profit was RMB 21 million and the earnings per share was RMB 0.06. The significant increase in performance was mainly due to the increase in operating income and the low base last year.
The company's traditional business small household appliances revenue of 810 million yuan, an increase of 22.2%, accounting for 84.3% of income, is still the main source of income. The growth of small household appliances business was mainly due to 1) the increase in business orders due to overseas supplementary orders. 2) While stabilizing European and American channels, the company has expanded its business channels in the Middle East and Japan. In addition to North America and Europe, revenues in other regions have doubled.
The LED business that the company intervened in 2009 has increased in volume this year. The revenue in the first half of the year was 150 million yuan, an increase of 825%. During the reporting period, the company increased its investment in the LED industry. The construction of the LED optoelectronic industrial base in Wuhu and Yangzhou is progressing smoothly. The packaging project of the Wuhu base has already produced some output. It cooperates with the EPIVALLEY company in Korea and promotes the epitaxial wafer. Significant progress has been made in the procurement of equipment for the chip, and the company's business transformation work has been implemented quickly.
In the first half of the year, the consolidated gross profit margin was 28.7%, up 9.5 percentage points year-on-year, and the net profit margin was 2.6%, up 2.9 points year-on-year. The overall increase in gross profit margin was mainly due to the significant increase in the proportion of LED business revenue with higher gross profit margin.
In the first half of the year, the sales cost was 150 million, a substantial increase of 201.6% year-on-year, mainly due to the one-time cost of 100 million yuan for sponsoring the Shanghai World Expo. After deducting this factor, the sales expenses were basically the same as the same period of last year. The current management expenses increased by 40% year-on-year, mainly due to the company's expenses for outsourcing LED expansion.
The company announced the non-public offering plan on October 14, 2009. The number of non-public offerings does not exceed 160 million shares, the issue price is 9.54 yuan/share, and the raised funds are about 1.6 billion. The funds raised are all used in Wuhu Dehao Runda. Optoelectronics Technology Co., Ltd. LED industrialization project. At present, the company's additional issuance has been approved by the CSRC, waiting for relevant approval materials, and then proceeding with subsequent issuance.
The company's interim report also revealed that the company's net profit is expected to increase by 640%-670% from the same period of the previous year, from 2.2 to 230 million yuan. The reasons for the change in performance include: the order situation of the company's small household appliance business is better than the previous year; The LED business invested in the previous year contributed part of the profit; the company's wholly-owned subsidiary, Wuhu Dehao Runda Optoelectronics Technology Co., Ltd. received a government subsidy of 252 million yuan in July 2010, and contributed a profit of about 189 million yuan after deducting the income tax.
Earnings Forecast and Company Valuation: Considering the comprehensive consideration, we expect the company's EPS for 10 years and 11 years to be 0.69 yuan and 1.33 yuan respectively (after deducting the subsidy, the earnings per share is 0.13 yuan and 0.67 yuan). Taking into account the company's growth, according to the 11-year EPS to give 20 times PE valuation, the company's target price for June-December is about 26.6 yuan, maintaining a "strongly recommended" rating.
Risk warning: LED downstream expansion is blocked, MOCVD adjustment time exceeded expectations.
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