he company's revenue growth of 24.01%, a decrease of 42.56% over the same period operating profit, operating margin decreased from 22.02% in the same period last year to 10.20%, primarily attributable to the following reasons: (1) The prices continue to fall, the gross margin level up sharply, we expect consolidated The gross profit margin of about 10 percentage points lower than the same period last year. Lower threshold of PV inverter technology, With the start of the installed capacity of the domestic market, the electrical equipment manufacturer crowding competitors to expand production scale, resulting in the decline of the sales price of solar cell the inverter, the impact of the company's gross margin level in PV and network link access standards should be improved, relevant national policies will be introduced to help improve the market position of the high-quality products, whereas before the gross margin level of product prices and manufacturers will continue to slow down.
(2) The increase in selling expenses to increase R & D investment. Company single-quarter sales expense ratio continued to increase since the middle of last year, has increased to 16.23% in the first quarter of 2012 from 5.71% in the second quarter of 2011, second quarter sales expense ratio is expected to remain at a high level, mainly is due to the rapid expansion of production scale, the substantial increase caused; other companies to maintain technological superiority and product performance advantage to keep increasing spending on research, which is also to bring some pressure on the performance of the company.
(3) a sharp decline in export business. 2011 domestic PV market installed capacity reached 2.9GW, compared to 0.5GW 2011 an increase of nearly five times the the installed domestic market start to drive the demand for PV inverters, the company will shift to the domestic market in a timely manner, but also therefore lose part of the foreign market share in the first half of 2012, the export business presents a more substantial decline in overseas inverter prices higher than domestic exports declined, the increase in the domestic market down the company's gross margin level.
Global inverter market is expected to double in the next five years, the domestic leading enterprises in the long term there is still investment value. PikeResearch latest report, renewable energy inverter market alleged in 2011 valued at $ 7.2 billion, is expected to double within the next five years, reaching $ 19 billion, of which the largest growth fastest in the field of solar panel energy. Global PV inverter market is still the SMA, Fronius, Satcon, Power-One giant to control, but domestic companies are led by PV sun power by virtue of its rapid development impact on the layout of the entire industry, the outbreak of the domestic market in recent years happens provides an excellent opportunity for struggling to break out of the domestic inverter manufacturers.
Earnings forecasts and investment rating. Considering inverter competition prices, wind power converter capacity release impact, we adjusted profit forecast previously, is expected to fully diluted EPS for 2012-2014 is forecast to be 0.50 yuan, 0.62 yuan and 0.67 yuan. 2012 20 times PE adjust the target price to $ 10, the company short-term shipments still increased substantially compressed profit margins, but the price declines, we remain optimistic about the long-term competitiveness of the company, maintaining a "buy" rating. Investment recommendations: Arts shares in 2012, 2013 earnings per share were 0.46 yuan, 0.54 yuan, corresponding to dynamic price-earnings ratio of 31 times, 26 times. We believe that the Arts shares "Two Wings" development strategy into the harvest period, in particular, is relying on the rapid development of photovoltaic power plant investment business, the company's new energy business is expected to continue to adverse economic growth.
At the same time, the company owned subsidiary of Jiangsu high investment capacity of the venture capital business and is expected to continue to contribute to the performance in the future.
Based on the successful integration of thin film batteries → PV power plant model, we are optimistic about the variety of shares in 2012 in the field of new energy development prospects, the venture capital business and continue to look forward to. Valuation levels and growth, for the first time give the company "cautious recommendation" investment rating.