Technology: profitability began to improve, optimistic about next year profit release rod

Event.

The company announced in 2012 three quarterly bulletin: 2012 1-9 months the company realized the business income 4180000000 yuan, a year-on-year increase of 24.22%, attributable to shareholders of the listing Corporation for the net profit of 290000000 yuan, drop compared to the same period 1.51%, earnings per share 0.41 yuan. 7-9 company to achieve operating income 1430000000 yuan, a year-on-year increase of 17.25%, attributable to shareholders of the listing Corporation for the net profit of 100000000 yuan, a year-on-year increase of 6.85%, earnings per share 0.14 yuan.

Comment.

Performance in line with expectations, the 3 quarter gross margin chain continued to stabilize growth year-on-year, 3 points.

The first three quarters of the company to achieve revenue 4180000000, grow 24.22% compared to the same period, in line with our expectations, the main reason lies in the benefit from the operator broadband construction and special wire in the domestic power network construction scale application of fiber optic cable and power cable, the company rapid business growth.

The company’s 3 quarter gross margin reached 21.78%, the chain continued to stabilize, year-on-year growth of 3 percentage points, the main reason lies in the power cable, radio frequency cables by the drop in the cost of raw materials affect the gross profit rate increased, and the fiber optic cable since the three quarter of last year prices basically stable, year-on-year gross margin stability.

Cost and operating income to suppress the performance of growth, but the main stability, operating profit grew 14%.

The first three quarters of the company in three at a total cost of $ 490000000, an increase of 150000000, cost rate reached 11.8%, an increase of 1.6 percentage points, cost growth comes mainly from the bar, cable and cable and other equipment brought development costs and rising labor costs and management costs of growth. In addition, the first half of last year the company business income is as high as 54000000, but this year only 21000000, down 33000000.

Therefore, increased costs and operating income fell to suppress the performance of the company’s growth, resulting in the company three quarterly net profit of 1.51% year-on-year decline, but the company’s operating profit grew 14%, show a company operating performance remains stable sword

4 quarter profit ability continues to rise, the growth of 10%-20%.

Last year, 3Q start, the company gross margin and cost rate are significantly worse, leading to decline in profit margins. Therefore, this year 3Q beginning, company cost rate up to ease the pressure, at the same time, along with the radio frequency cable gross margin return to normal, copper and other raw materials prices fell, the company’s overall gross margin of gradual recovery, 3Q gross margin year-on-year growth of 3 percentage points, 4Q is expected to gross margin will also increased year-on-year. In addition, the 4 quarter of last year the company rushed back nearly 20000000 of operating income, will enable the company to the 4 quarter of this year grew faster performance. Based on this, we expect the company all-around performance growth 10%-20%.

The long term, optical fiber preform and special cable will support the long-term development of the company.

1) the optical fiber preform company project this year has production capacity of 200 tons, is expected to produce 400 tons at the beginning of 13, 14-15 years is expected to produce 600 tons of process improvement. In 13 years with 400 tons capacity for comprehensive release rod, the optical fiber preform company will release a large number of profit, which will support the company’s long-term development and future of industry integration.

2) special cable leading domestic, is China’s first breakthrough international submarine cable market makers, into the world’s largest integrated supply chain. The company actively explore the international market, special cable is expected to achieve rapid growth in overseas market. At the same time, with the domestic coastal power project construction to start, special cable will also in the domestic market at the same time force.

Profit forecast: the short term, 4 quarters of the company’s gross margin will continue to stabilize, at the same time cost rate pressure slow, profit ability will be improved considerably compared to the same period, profit rate, predicting annual performance year-on-year growth of 10%-20%. The long term, the company under the release of production capacity, special cable breakthrough and special wire ratio will enhance the driving performance of the company growth, giving 12-14 Tan Bin EPS : 0.59, 0.78, 0.90 yuan, to maintain “overweight ” rating.

Risk tip: industry competition intensifies, the submarine cable such as new business development is slow, raw material rises in price.