Rui Qi shares: 2011 net profit or increase of 11%, based on the mid-term fair value of the price rate of 33.26 yuan

Shanghai Ruiqi Tools Co., Ltd. (300126), whose main business is R&D, production and sales of high-grade professional electric tools, was listed on the Shenzhen Stock Exchange in October 2010.

In 2010, the company's main business was developed steadily, with an operating income of 418 million yuan, an increase of 31.09% over the previous year, and a net profit of 54.44 million yuan, a year-on-year increase of 27.3%.

(Note: The data of Yingde Consultation “Database of China’s Listed Companies” comes from the annual reports of listed companies. Based on the principle of loyalty, the data has not been adjusted due to changes in the scope or accounting rules of the ex post facto, and may be related to transactions. There are some differences in the data in the system, so here is the explanation.

In terms of gross profit, the data shows that the gross profit margin of the company has been significantly higher than the industry average in recent years. In 2010, the company's gross profit margin was 22.78%, which was 4.96 percentage points lower than the previous year, mainly due to the rapid rise in raw material prices and the company's delay in adjusting product sales prices. During the same period, the average gross profit margin of the electrical appliance industry in Shanghai and Shenzhen was 17.08%.

With regard to the control of operating expenses, the data shows that the company’s operating expense ratio has been significantly lower than the industry average for four years, with 3.77% in 2010 and the industry average of 6.32% for the same period.

With regard to management cost control, the data shows that the company's investment in research and development over the years was relatively large, resulting in a significantly higher management fee rate than the industry average. With significant breakthroughs in operating income, the company’s marginal management fee rate dropped sharply in 2010, from 7% in the previous year to 5.88%, still slightly higher than the industry average of 5.03% over the same period.

With respect to financial cost control, the data shows that the financial expense ratio of the company has decreased significantly in the past two years. In particular, IPO over-raised in 2010. Adequate equity capital has greatly improved the status of funds. The annual interest income exceeds interest expenses, and the financial expense ratio has dropped to − 0.06%, the average financial expense rate for the same period was 0.38%.

In terms of sales profitability, due to the high gross profit margin, the company's sales profit rate has been significantly higher than the industry average for the fourth consecutive year. It was 15.1% in 2010 and the industry average was 6.25% over the same period.

In terms of capital structure, the data shows that the company’s asset-liability ratio dropped significantly after listing in 2010, which dropped from 40% before listing to 11.02%, which means that the company will have greater ability to expand its business and market.

In terms of inventory turnover, the data shows that the inventory turnover rate of the company has improved significantly in the past three years, roughly equivalent to the industry average. In 2010, the company took centralized stocking measures based on the number of orders in 2011, and on the other hand, increased the stock prices for some major materials in the main raw material market, resulting in a large increase in inventory at the end of the year and an inventory turnover rate of 3.35. Slightly below the industry average of 3.96.

In terms of return on capital, the data shows that the company’s net asset return before listing was as high as 25%, which was nearly 15 percentage points higher than the industry average. After the listing, the sharp rise in capital gains caused a sharp drop in the ROE, which was only 6.04% in 2010. The industry average was 10.48% over the same period. From this point of view, the IPO fund-raising project will start production as soon as possible and generate revenue, which is the key to the company's increase in the rate of return on capital.

In terms of liquidity, the data shows that before the IPO, the current ratio of the shares of Ruiqi [31.41 0.77% shares] was roughly the same as the industry average, close to 150%. After the IPO, the company's current ratio rushed to 890%, while the industry average was 154% over the same period.

In terms of profit distribution, the data shows that the company has not distributed any dividends to shareholders during the past four years. In the same period, the average dividend ratios of listed companies in the electrical and electronics industries in Shanghai and Shenzhen were 25%, 18% and 13.6%, respectively.

The professional power tool industry belongs to both the equipment manufacturing industry and the modern equipment manufacturing industry. In the Twelfth Five-Year Plan, the policy of vigorously developing "advanced equipment manufacturing industry" and "high-end equipment manufacturing" will promote the rapid development of China's equipment manufacturing industry. At the same time, it will also boost the strong demand for professional electric tools. The development of odd shares has brought opportunities. After the successful IPO, the company will invest nearly 260 million yuan in high-grade professional power tool industrialization expansion and technical transformation and professional motor R&D and other projects. After the completion of the project, the company's performance will achieve a major breakthrough.

The use of Yingze’s financial model for listed companies to forecast Ruiqi’s 2011 annual results shows that the company’s total main business revenue for 2011 was 447 million yuan, a year-on-year increase of 7%, and annual profit was 60 million yuan, a year-on-year increase of 10.82. %. According to the company's current total issued shares of 84.2 million shares, it is expected that its annual earnings per share in 2011 will be 0.71 yuan (2010 EPS is 0.64 yuan), and net assets per share at the end of the year will be 11.35 yuan (2010 is 10.64 yuan).

On April 19, the company's stock price closed at 31.71 yuan, down 0.41 yuan, a decrease of 1.3%. Yingze's valuation network calculates the market valuation of the company's book-to-book ratio of 2.93 times at the close. The company's interim fair value per share is 33.26 yuan.

From a technical point of view, the stock price of the company has fallen in volume and price in the past two weeks. The latest three crows (three consecutive yin yang) indicate the possibility of further decline in the stock price in the short term. Investors should take a wait-and-see attitude.