Category: Money tips Release Date: 2006-01-06
Insights
Shuangliang market shares of machinery business is not look kindly on the pairs of benzene, has misgivings about the project, and we believe that shares Shuangliang machinery business and will benefit from the country due to the high starting point for energy-saving environmental protection plans and the huge potential for growth; market for pairs of benzene, has misgivings about the project, but the We study concluded that benzene project operation was very successful and profitable space protection, will bring big profits; pairs of main business to ensure the company's performance continued to grow rapidly.
Investment Points
Fit energy-saving environmental protection machinery business plan, growth potential. Copper prices fell and the company's continued ability to reduce costs will significantly enhance the level of bromine cooler profitability is expected to contribute to bromine cooler in 2007 earnings per share 0.17 yuan in 2008 is expected to contribute to earnings per share were 0.19 yuan; produced by heat exchanger market demand exceeded our original expectations, expected in 2007 is expected to contribute to earnings per share 0.03 yuan, 0.05 yuan Contribution in 2008; Power Cooler optimism, air cooler localization has just started, growth of a large space, is expected to contribute to 2007 earnings per share 0.04 yuan; 2008 0.10 yuan.
Two pairs of benzene by the end of the project put into production. The company's two pairs of benzene has started the construction of the project is expected by the end of production, the domestic supply gap in the presence of styrene styrene ensure the profitability of space, conservative estimate of 2008 pairs of benzene, the project is expected to contribute a total of conservatively estimated net profit of 215 million contribution to Earnings per share 0.70 RMB.
To maintain "strongly recommended" rating, target price of 12 ~ 15 respectively. We expect the shares Shuangliang 2006 ~ 2008 sales revenue will reach 124% compound annual growth rate of net profit compound annual growth rate will reach 100%, expects 07 ~ 2008 EPS were 0.64 and 1.04 yuan.
We are the company's dual-core business caution by industry an average of 8 estimates the valuation discount is granted to the company for 6 months and 12 months target price was 12 yuan and 15 yuan, which is trading lower than the target price is still 46% ~ 83% of the room to rise. To maintain "highly recommended" rating.
Risk Warning
Benzene and ethylene price fluctuations will affect the company's dual-benzene project profitability.
Cooler sales eventually surviving in a certain uncertainty.
Direct-fired natural gas prices on the sales of cold bromine are adversely affected.
i. Copper fell to enhance the profitability of bromine cooler
Since the copper in October 2006 began to accelerate down to January 2007, from 72,000 yuan / ton fell to 56,000 yuan / ton. In the first three quarters of 2006 average price of copper in 2005 40,000 yuan / ton rose to 62,000 yuan / ton case, the company by improving the design means lower costs and raise prices to effectively mitigate the rising costs resulting from higher copper prices, gross profit margin of 35.76 percent from 2005 down to 32.86 percent, only 2.9 percentage points lower.
Company purchases copper payment method is basically the average price of a monthly billing by the month, so the cost of the basic means of copper current market price of copper in 2005 at 40,000 yuan per ton, when the cost of copper accounted for 50% of , high price of copper makes the existing model of product margins declined significantly. In order to save consumption of copper, the company launched in 2005, a new generation of product H2 products, H2 models are based on the original H-optimal design through the system introduced by a larger amount of smaller cooling products, due to the volume The narrowing and the increase of cooling capacity, making supplies to reduce prices, while the corresponding increase of the users, the same cooling capacity than the original price of the product have declined, and I quickly accepted by customers.
We estimate that if every company supplies all the conversion to a decrease in copper consumption on each machine to save the equivalent of 1.3 tons of copper! The original product of copper consumption is about 6 tons each, has now dropped to around 4.7 tons.
The impact of energy-saving plan by the state, we expect the 2007 market demand for bromine cooler is expected to maintain steady growth, while the company is the industry's leading enterprises, in 2007 prices are expected to largely maintained, and if the copper price in 2007 to maintain in the current price of 56,000 yuan / ton, in accordance with the current product price and the amount of copper consumption in 2007, bromine cooler OPE is expected to remain at 36.39%. We expect the company in 2007 sales growth of 10% in the case of bromine cooler is expected to reach 53.08 million yuan net profit contribution to earnings per share were 0.17 yuan; in 2008 net profit of 58.39 million yuan is expected to contribute to earnings per share 0.19 yuan.
ii. Heat exchanger-than-expected growth in
There exist high-end heat exchanger supply gap
Heat exchanger is widely used in automotive, aerospace, petrochemical, power, medicine, metallurgy, refrigeration, light industry, food, construction machinery and other industries as a general-purpose device. Also known as heat exchangers, is part of the thermal fluid heat transfer to the cold fluid equipment. Heat exchangers in the production of the industrial sector occupies an important position. In particular, in chemical production, heat exchangers can be used as heater, cooler, condenser, evaporator and re-boiling, etc., the application was widespread. Heat exchanger is actually a heat exchanger, heat exchanger, a direct impact on the efficiency of energy utilization efficiency, the heat exchanger in metallurgy and chemical industry, energy-saving plan will play a very important role.
Heat exchanger market in China as the petrochemicals, iron and steel industry's rapid development has been rapid growth, from 2001 to 2005 pieces of this 5-year average annual sales growth rate of 30% or more, "Eleventh Five-Year" period as China's petrochemical and Steel sustainable development and energy-efficient planning, implementation, heat exchanger is expected to maintain rapid growth rate of over 20%.
China's high-end heat exchanger there is a big supply of domestic production shortfall, imports is far greater than the size of the export scale, in 2001, China's imports of heat exchanger, respectively, compared with the amount and average export volume, amount and average price of more than 44640 units , 80.216 million U.S. dollars, 245.72 U.S. dollars / units; but by 2005 the gap between imports and exports has been expanded to 75667 units, 345.17 million U.S. dollars, and 1347.57 U.S. dollars / units. China's exports heat exchangers mostly low-end and low added value products, the average price average of less than half the average price of imports, while imports of products are mostly high-end products with higher added value.
Company's products are import substitute heat exchanger products
Shuangliang card stock and Switzerland Swiss Buddhism co-production of heat exchangers are heat exchangers of the more high-end products, the implementation of these high-end products are Europe and the United States standards, the original oil system by Germany, Kalai Rui Buddha , GEA and other European and American firms a monopoly. At present the main customers are Shell, Chevron and other major petrochemical manufacturers, his company has with Siemens, Shell, British Petroleum, the signing of the German Linde nearly 2 million orders, the product has begun to enter the international market, the high-end heat exchanger.
Heat exchanger higher than expected growth
We had expected the company card to Sweden and Switzerland co-production of heat exchangers Buddha can bring more than 4000 million a year in sales and net profit of more than 400 million, but according to our heat exchanger industry, the latest research related to the user's understanding of heat produced by the market demand is likely to far exceed our previous expectations. We estimate that in the near future the company will be able to sign more orders are expected to heat exchanger 2007 is expected to reach 1 billion in sales revenue and net profit of 10 million contribution to earnings per share were 0.03 yuan; in 2008 can contribute 150 million yuan the sales revenue and net profit of 15 million contribution to earnings per share were 0.05 yuan.
iii. Power Air Cooler optimism
Air Cooler import substitution began to
As the thermal processes that need to consume a large amount of water, making air-cooled power plant technology, especially direct cooling technology in thermal power plant construction at home and abroad has been widely used. Using the traditional wet method, a 600,000 kilowatts of power plant water consumption of 10 million years, ~ 18 million tons, while the same air-cooled power plant generating capacity less than the amount of annual water consumption by 3 million tons. Before 2004, air-cooled power plant technology has been monopolized by European and American companies.
"Eleventh Five-Year" period, large-scale air-cooled power station equipment is included in the key state support and guide the future of major technical equipment and one of the products, and electrical equipment at home as a policy option, the State Council in the "Economic and Social Development "Eleventh Five-Year Plan" the division of tasks, "clearly states that the large air-cooled power station as an energy industry focus on the development of key projects, the present state examination and approval of the plant should be in the Yellow River to the north of the basic ways to use air-cooled.
Shuangliang Air Cooler optimism
Shuangliang shares on December 8, 2006 with the signing of Shanxi Electric Power Survey and Design Institute of Power air cooler made a strategic cooperation agreement, Shanxi Electric Power Survey and Design Institute is the power plant air cooler system design level-class enterprises, design institutes of the design capabilities and history of performance, coupled with the company's manufacturing capabilities and management capacity, will likely power plant production and sale of air coolers greater room for growth.
Although the power supply tension eased somewhat, the power investment rate will slow down, but because air cooler is a key state to promote environment-friendly products in China is still in rapid growth phase, growth prospects are good, the domestic power plant on the degree of recognition of domestic air coolers rising in 2004 air coolers localization of Ha Kongtiao in 2006 from the hands of foreign manufacturers and win orders for more than 1 billion yuan, now often with the GEA Shuangliang shares and other international companies bidding on the same stage, the domestic product price advantage and good Service makes the power plant air cooler localization becomes a definite trend.
Based on our power plants and electricity-related research institute, the company power plant air cooler has been successful since it was launched over the subject of more than 8,000 million in 2007 is expected to gain more orders, a conservative estimate is expected to achieve 2007 sales income 1.2 billion yuan can be realized net profit of 12 million contribution to earnings per share were 0.04 yuan; in 2008 expected to exceed 300 million yuan sales revenue, contribution to net profit of 30 million, earnings per share of 0.10 yuan.
iv. Two pairs of benzene by the end of the project put into operation
China has become the world's largest consumer of styrene. However, the depth of China's long-term dependence on imports of styrene, according to statistics, China's 2000 imports of styrene is 116 million tons in 2003 to 2.6606 million tons imported in 2004, peaked at 2.889 million tons, styrene external dependence in 2003, and 2004, respectively, as high as 73.85% and 74.70%. In 2005, China imported the first decline in styrene than in 2004 by 7.7 million tons, the foreign dependency rate fell to 69.44%. Entered after 2006, China's imports of styrene has continued to decline before the 9 months of imports amounted to 1.8834 million tons, compared with the same period in 2005 dropped by nearly 15 percentage points, which indicates that starting in 2005 China's own growth rate of the first supply of styrene times more than the growth rate of demand, imports declined, the demand for our country styrene increased by 40 million tons per year is expected by 2010, China's domestic production capacity of styrene is still unable to meet domestic demand.
High transport costs to ensure higher profit margins than the domestic styrene
Because styrene is toxic, dangerous chemicals, long-range costs are relatively high in North America to Asia and transportation costs per ton at 450 yuan, Europe to Asia and transportation costs per ton of 700 yuan, plus value-added tax and customs duties, European and American products there is no profit margins in Asia. High transport costs and huge domestic demand gaps and continued strong growth of domestic producers to ensure the profitability of space for continued expansion of China's styrene provided the initial impetus.
Based on historical price statistics, styrene prices and Benzene (Styrene raw material costs accounted for 80%) of price fluctuations have strong synchrony, indicating a stronger ability of styrene switching costs, profit margins relatively stable. According to benzene, ethylene, styrene, and aniline at current prices is estimated that the net profit of styrene at 1,000 yuan per tonne over aniline net profit of 1300 yuan per ton, nearly one year net profit per ton of styrene at 800 yuan per ton of aniline yuan net profit in 1000, nearly a year can estimate the average net profit per ton of styrene at 900 yuan, an average net profit of aniline in the 1,100 yuan per ton more than in 2007 put into normal production after the annual production of benzene about 180,000 tons of ethylene, aniline of about 40,000 tons. Net profit of 2.0 × 60% = 1.2 million contribution to earnings per share of 0.40 yuan.
The company has started two pairs of benzene, the project started and construction is expected by the end of production, three years, the domestic supply gap of styrene will continue to exist, the product has a strong ability to cost-shift is expected to project a total of 2008 pairs of benzene, net profit is expected to contribute to a conservative estimate 215 million contribution to earnings per share of 0.70 RMB.
Profit forecasts assume
Suppose the next two years:
Tax rate to maintain the current level;
Copper and steel prices remain at current 5600 yuan / ton or less level;
Bromo-cooler sales at an annual rate of 10% growth;
Styrene and aniline in the current level of prices an average of 5 percent per year. Annual gross margin reduction of 0.5 percentage points.
ii. Valuation
We expect the shares Shuangliang machinery business revenue from 2006 to 2008 compound annual growth rate of up to 18%, if one is considering pairs of benzene items, then the company's sales revenue will reach 124% compound growth in net profit to reach 100 percent compound annual growth rate . Shuangliang share in 2007 forecast of EPS was 0.64 yuan, of which pairs of benzene, the project contribution to 0.40 yuan, 0.24 yuan Contribution machinery business; 2008 EPS up to 1.04 yuan, of which pairs of benzene, the project contribution 0.70 RMB, machinery and business contributions to 0.34 yuan.
Machinery business close to the company in 2007 and 2008, respectively, the average dynamic price-earnings ratio of 25 times and 16 times, while the petrochemical business close to the company in 2007 and 2008, respectively, the average dynamic price-earnings ratio of 25 times and 19 times. As the market shares of pairs of Shuangliang main concerns, we give the company the industry average is relatively lower valuation, that is, 20 times respectively in 2007 city of 15 times earnings and 2008 earnings estimates, the 2007 and 2008, the corresponding shares were 12.8 and 15 yuan, a result, we give the company 6 months and 12-month target price was 12 yuan and 15 yuan, the current share price is still 46% ~ 83% upside. To maintain "highly recommended" rating.
