From January to September 2011, Jiangsu Hongbao Hardware Company realized operating income of 333 million yuan, an increase of 13.82% over the previous year; operating profit of 17.63 million yuan, a year-on-year decrease of 1.13%; net profit attributable to the parent company owner of 15.11 million yuan, a year-on-year decrease of 4.20% Basic earnings per share of 0.08 yuan.
The main business continued to rise trend Hongbao Hardware mainly engaged in various styles of pliers, wrenches, woodworking tools, tools kits, garden tools, cutlery knives, scissors and various forgings production. The main business is divided into two categories: tool hardware and forging hardware, and the income share is evenly divided. In the current period, the sales revenue of tool hardware and forging hardware products continued to increase, and the comprehensive gross profit rate was 17.75%, both in the same period and in the previous quarter.
Good hardware hardware product structure adjustment Hongbao Hardware was originally an OEM processing enterprise, and it was supplied to well-known hardware sales manufacturers at home and abroad. So far, the company's traditional hardware products are full of orders. The gross profit margin of the business is about 18%-20%, and the growth rate is stable. In order to cope with the adverse effects of the economic cycle, the company has developed home kitchen appliances since the beginning of this year, mainly targeting the domestic high-end market and adopting direct sales. With the upgrading of consumption, residents' demand for high-quality kitchen appliances will gradually increase, and it is expected that the proportion of household kitchen appliances in the company’s tool hardware products will gradually increase in the future. As the gross profit rate of this part of the product reaches 30%, the overall gross profit margin of the entire tool hardware business of the company is expected to increase further.
Forging Hardware or will face sales pressure Hongbao Hardware completed the “200,000 high-speed rail forgings investment and investment project†in the first half of this year. In order to improve the large forging capacity, the company introduced two large-scale forging presses in the first half of the year. It was originally expected to start production capacity in the second half of the year. Will gradually release. However, the company's sales of high-speed rail forgings require various types of quality certification and tendering to achieve sales for a certain period of time. More importantly, since July, the intensive high-speed rail accident has caused the government to halt the construction of high-speed rail projects and carried out large-scale inspections of the projects under construction. The construction of high-speed rails has slowed down. In addition, the depreciation expense accrual for the current period dragged down the current operating profit. The current manufacturing expense rate rose to 8.80%, an increase of 2.62 percentage points year-on-year. In summary, the forgings products provided by the company for high-speed railways will encounter policy risks, and the downstream demand will be subject to large uncertainties. There will also be great pressure on sales receipts.
Cultivate the growth point of new energy, extend the company's photovoltaic industry chain Hongbao Hardware established a subsidiary company last year to implement "annual 300MW solar crystalline silicon wafer and 100MW component project" is expected to officially put into production in November this year. In addition, in August of this year, the company invested 30 million yuan in the form of a joint venture to establish "Jiangsu Hongbao [8.86-1.77% share bar research report] Photovoltaic System Co., Ltd." with a capital injection of 50 million yuan. The main business scope is solar photovoltaic power generation; photovoltaic power station design , construction and so on. It can be seen that the company has gradually extended its industrial chain in the field of new energy and is gradually fostering new profit growth points. However, given the current overcapacity of solar wafers and the downward trend in the prices of solar wafers and batteries, we have reduced the project's profit forecast.
Earnings Forecast and Investment Ratings 2011-2013 Hongbao Hardware EPS was RMB 0.10, RMB 0.12 and RMB 0.16, respectively. According to the company's closing price of 9.62 yuan on October 17th, the P/E ratio is 94x, 81x, and 60x, respectively, taking into account the uncertainties of the photovoltaic business's contribution to performance, maintaining a "neutral" investment rating.
Risks indicate a slowdown in economic recovery; rising risks of raw material prices and labor costs; and policy risks in the photovoltaic power generation industry.
The main business continued to rise trend Hongbao Hardware mainly engaged in various styles of pliers, wrenches, woodworking tools, tools kits, garden tools, cutlery knives, scissors and various forgings production. The main business is divided into two categories: tool hardware and forging hardware, and the income share is evenly divided. In the current period, the sales revenue of tool hardware and forging hardware products continued to increase, and the comprehensive gross profit rate was 17.75%, both in the same period and in the previous quarter.
Good hardware hardware product structure adjustment Hongbao Hardware was originally an OEM processing enterprise, and it was supplied to well-known hardware sales manufacturers at home and abroad. So far, the company's traditional hardware products are full of orders. The gross profit margin of the business is about 18%-20%, and the growth rate is stable. In order to cope with the adverse effects of the economic cycle, the company has developed home kitchen appliances since the beginning of this year, mainly targeting the domestic high-end market and adopting direct sales. With the upgrading of consumption, residents' demand for high-quality kitchen appliances will gradually increase, and it is expected that the proportion of household kitchen appliances in the company’s tool hardware products will gradually increase in the future. As the gross profit rate of this part of the product reaches 30%, the overall gross profit margin of the entire tool hardware business of the company is expected to increase further.
Forging Hardware or will face sales pressure Hongbao Hardware completed the “200,000 high-speed rail forgings investment and investment project†in the first half of this year. In order to improve the large forging capacity, the company introduced two large-scale forging presses in the first half of the year. It was originally expected to start production capacity in the second half of the year. Will gradually release. However, the company's sales of high-speed rail forgings require various types of quality certification and tendering to achieve sales for a certain period of time. More importantly, since July, the intensive high-speed rail accident has caused the government to halt the construction of high-speed rail projects and carried out large-scale inspections of the projects under construction. The construction of high-speed rails has slowed down. In addition, the depreciation expense accrual for the current period dragged down the current operating profit. The current manufacturing expense rate rose to 8.80%, an increase of 2.62 percentage points year-on-year. In summary, the forgings products provided by the company for high-speed railways will encounter policy risks, and the downstream demand will be subject to large uncertainties. There will also be great pressure on sales receipts.
Cultivate the growth point of new energy, extend the company's photovoltaic industry chain Hongbao Hardware established a subsidiary company last year to implement "annual 300MW solar crystalline silicon wafer and 100MW component project" is expected to officially put into production in November this year. In addition, in August of this year, the company invested 30 million yuan in the form of a joint venture to establish "Jiangsu Hongbao [8.86-1.77% share bar research report] Photovoltaic System Co., Ltd." with a capital injection of 50 million yuan. The main business scope is solar photovoltaic power generation; photovoltaic power station design , construction and so on. It can be seen that the company has gradually extended its industrial chain in the field of new energy and is gradually fostering new profit growth points. However, given the current overcapacity of solar wafers and the downward trend in the prices of solar wafers and batteries, we have reduced the project's profit forecast.
Earnings Forecast and Investment Ratings 2011-2013 Hongbao Hardware EPS was RMB 0.10, RMB 0.12 and RMB 0.16, respectively. According to the company's closing price of 9.62 yuan on October 17th, the P/E ratio is 94x, 81x, and 60x, respectively, taking into account the uncertainties of the photovoltaic business's contribution to performance, maintaining a "neutral" investment rating.
Risks indicate a slowdown in economic recovery; rising risks of raw material prices and labor costs; and policy risks in the photovoltaic power generation industry.
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