Stable growth in revenue Foshan Lighting achieved operating income of 10.3 yuan in the first three quarters, a year-on-year increase of 15.4%; the third quarter was 330 million yuan, a year-on-year increase of 16.4%. Among them, the light bulb business continued to grow steadily due to the continuous expansion of production capacity. At the same time, the resort business established at the end of last year also began to contribute revenue, which led to the growth of income to some extent.
The gross profit margin in the third quarter continued to decline year-on-year, but the overall gross profit margin of Foshan Lighting in the first three quarters was 21%, down 4.1 percentage points from 25.1% in the same period last year. The gross profit margin for the third quarter was 19.4%, down 5.2 percentage points year-on-year, but was basically the same as the second quarter. We believe that the year-on-year decline in gross profit margin was mainly due to the rising cost. The prices of production factors such as copper, heavy oil and liquefied petroleum gas continued to rise, and the wages of production workers rose by 10%, resulting in rising product costs.
The sales expenses increased significantly, and the administrative expenses were controlled during the first three quarters, which was RMB 89.52 million, a significant increase of 114.4% compared with the same period of last year; the expense ratio increased by 4 percentage points from the 4.7% in the same period last year to 8.7%.
The main reason is the impact of the substantial increase in sales expenses. The sales expenses in the first three quarters reached 42.88 million yuan, and the sales expense ratio reached 4.2%, an increase of 1.7 percentage points over the same period of last year, as the company increased its promotion and promotion of the domestic market. New offices and enhanced advertising efforts. The management expense ratio was well controlled, with only 3.2% in the third quarter, down 1.3 and 1.9 percentage points year-on-year.
Stocks and fund income increased sharply In the first three quarters, the company realized a fair value change income of RMB 68.8 million and an investment income of RMB 260 million. Its investment stocks and fund income totaled RMB 333 million, which was 12.6 times that of the previous year's 24.47 million yuan, accounting for the same period last year. 12.3% of operating profit rose to 73.8% this year. These gains are mainly derived from the capital gains and fair value revaluation gains of the stocks and funds invested by the company.
Maintaining profit forecast and “prudent recommendation†investment rating We maintain our earnings forecasts for Foshan Lighting's 2007 and 2008 earnings per share of 1.027 yuan and 1.384 yuan respectively. The stock's current P/E ratios in 2007 and 2008 are 23.7 times and 17.6 times, respectively, and the valuation is not high. However, considering that the company's current performance of more than 70% comes from stock returns, its long-term performance growth can be observed, so we maintain a “prudent recommendation†investment rating.
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