Yinxing Energy's photovoltaic business starts soon

In the third quarter of the company’s announcement recently, the company’s operating income was 1.109 billion yuan, a year-on-year increase of 73.98%; operating profit was 51.70 million yuan, an increase of 30.59% year-on-year; net profit attributable to the parent company’s owner was 38,948,600 yuan, an increase of 4.09% year-on-year. The company expects net profit attributable to owners of the parent company for the whole year to increase by 48.17%-95.46%.

Industry insiders pointed out that they continue to be optimistic about the operation of wind farms and maintain their “overweight” rating. We maintain profit forecast for the company's 2011/12/13 EPS of 0.24/0.45/0.78 respectively, and we are optimistic about the continued expansion of its wind farms in the future. However, the biggest risk of the company is still insufficient funds. If the shortage of funds can be solved, all current business developments will have better development prospects, and the “overweight” rating will be maintained for the time being.

According to people from the industry, the company's photovoltaic business will start soon. The company's solar cells and components have achieved small-scale production and are awaiting various international certifications. It is expected to expand overseas markets in 2011. Assuming that planned production capacity is on schedule, the diluted EPS for 2010 and 2011 is expected to be 0.23 and 0.48 respectively. At a 45x P/E ratio, the reasonable valuation for 2011 is about 22 yuan. The stock price may fluctuate in the short term, but there is a lot of room for growth in the long-term, giving an “overweight” rating.