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Investment in Securities: high level of electrical optimistic about the State Grid Corporation entered the strategic impact

    High level of electrical (600 312) today announced 2009 interim report, operating income fell 8.80%, excluding non-recurring gains and losses net profit fell 17.88%,booster cables EPS 0.138 million, slightly better than previous market expectations.
     Interim results highlight the high level Toshiba-than-expected increase of speed, and delay in revenue recognition the first half of this Part, battery clip be a drag on company performance.

    Investment Highlights:

    Toshiba-than-expected growth in high-level, performance of the company once again become a major support.Toshiba 09 in the first half of high levels of income and net profit grew by 58% and 40% of the company's investment income contributed net profit of 84.53% of the company.tow rope Toshiba high level a year earlier delay in delivery due to natural disasters, and the sales price significantly, resulting in both income profit lower than expected. But the first half of 2009 levels by virtue of its high-Toshiba brand, delivery-than-expected growth. We believe that the high level of future product prices and margins Toshiba gradual decline is inevitable, but can be offset by the expansion of sales of lower gross margins, ratchet tie dowm we determine the level of high profits for Toshiba contribution to the future still greater.

    Division revenue decreased mainly due to product delivery and some uneven progress of the construction slowdown caused by the user. 2009 appeared the power substation construction equipment industry slowdown, the phenomenon of delay in delivery of customer requirements. Therefore, the high level of revenue decline is the industry headquarters normal. Product gross margin declined on average, of which gross profit margin fell breaker more than 6 percentage points, isolating switches and earthing switches gross profit margin fell more than 8 percentage points, but closed composite electric margin increased by 0.14 percentage points year on year, mainly market competition, product prices decreased. We believe that the current decline in product gross margin more basic no decline in the next room.

    Affected by the industry, new orders lower than the same period last year, but considering the company's industry position and the second half of the more tender the year the order is still guaranteed. Add this Part 09 contract 1.119 billion yuan in the first half (excluding the contract to be awarded 500 million yuan), down 16% (considering the bid to be a contract.) Mainly the first half of the total user declined the tender, the company bidding a corresponding decrease in the total amount, but the successful rate remains high. We believe that the second half of the national network are to enhance the possibility of bidding, in particular high voltage large amount of orders, while taking into account the company's current market position, shareholder support, the year the order is still guaranteed.

    Part UHV short term products will be profitable growth in 2010, long term bullish on the company entered the State Grid will bring the company's strategic impact. UHV 2010 speed up construction of the domestic, the next few years the company millions of kV and 750kV product sales revenue will reach about 1.5 billion per year, while the ultra-high voltage products, gross margin of 20-25% performance of the company must make a substantial improvement. In addition the country entered the high level group after the network, the company would be a strategic improvement. Including the State Grid for the high level of development and as a platform to Toshiba, there are other assets into a strong market expectations. The most direct is to take a single listed company is the ability to increase market share once again improved.

    Investment advice: maintain the pre-earnings forecast, EPS is expected to 0.41,0.73,0.96 2009-2011 yuan. Although the company estimates have significantly more than other companies in the industry, but taking into account the special high-pressure area in the future there may be advantages and strategic development, investment opportunities, to maintain "recommended" rating, short-term target price of 22 yuan.

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