Category: Money tips Release Date: 2006-08-31
Investment Highlights:
Short-term risks facing the company's energy crisis. In December 2006 because of Taiyuan coke gas plant equipment failures and limiting the production of the impact of intermittent interruption of gas supply month total of about 10 days, affecting the 2006 four quarter production is expected to the annual export of around axle 36000, December 6000 I root for export axles due to lack of impact of the energy transferred to the production in 2007. The company in 2006 is expected to domestic axle 63000, plus a small amount of wheel to sell the company in 2006 annual sales of about 10 thousand roots axle. In January 2007 remained relatively tight supply of gas has also experienced gas outages. As the gas tight cause intermittent shutdown by the end of 2006, we lowered the company that year EPS0.05 yuan, fell to 0.50.
1-2 years, the company faces pressure on yuan appreciation and rising steel prices. January 1, 2007 start, Baosteel has begun to increase shaft steel billet price 150 yuan / ton, at present not TISCO price adjustment. Taiyuan Iron and steel will be raised if the 150 yuan / ton, in the other conditions remain unchanged under the yuan would reduce the company's EPS0.06. Firms exported axle is also faced with the issue of renminbi appreciation, and efforts are offset by price increases in advance the appreciation of the factors.
Company plans to export in 2007 to increase the number of axle 20000, want to achieve close to 60000 export axle. But so far, export orders are still under discussion, has not signed a large amount of orders. The need to wait for the signing of a specific set around the Spring Festival.
February 9, 2007 Ministry of Railways Tender 15000 trucks in the first half an opening, the proportion of domestic demand growth is not. Price and cost of vehicles are expected to have a few thousand dollars up, gross margin change is not big. Vehicle market share, the company is expected to have remained stable throughout the year and the table of foreign sales of C70 vehicle around 1500.
11.5 Company's development plan in 2010 to become the world's largest axle supplier. Currently the world's largest supplier of axles in the United States in 1995 had reached an annual output of 180,000 axles a record has been shrinking in recent years. In accordance with the plan, the company needed by 2010 to reach annual production of about 180,000. Company's annual production of about 10 thousand 06 roots, the next four years to increase each year of about 20000.
Thermal processing capacity is currently relatively well-off, with 500 tons of fine calcined machines and 600 tons of concentrate a set of Calcined machine at the same time started production capacity of up to 150,000 / year. 500 tons of fine calcined machine is currently being modified, is expected to complete reconstruction in 2007 after Chinese New Year, when the annual capacity of 5-6 10000. 600 tons of fine calcined machine to normal operation, designed annual capacity of 90000, the actual maximum of up to 120,000 or so.
Mechanical processing capacity of short-board, the company plans in the next 1-2 years to expand production capacity to 14-15 10000 / year. Currently there are about 90000 / year processing capacity of machinery, including finishing capacity of 20000 or so, a serious shortage. In order to meet the company's machining capabilities position the company as much as possible the supply of semi-finishing domestic axle shaft, axle to strictly control export finishing axis ratio. Company plans to expand production capacity through the following ways: 1, use part of the Group's processing capacity to conduct military Subcontractor; 2,4 10000 Finishing Workshop scheduled for production in mid-2007 up to now has 2 sets of import grinder in place, and complete installation ,6-8 months after the other two sets import grinder will be in place. Is expected to operate at full capacity single grinder can produce 10000 finishing axle.
The company in 2007 and 2008 profit growth factors: one, production increased by 20000 / year. 121 Kobo is expected in 2007 will start the second half of normal production, combined with the Group's companies outside the association would bring about 20000 new capacity axles. 2, gross margins to continue upward. The second half of 2007 new 20000 capacity for finishing the basic axis, than the semi-finishing unit axis increased by 300 yuan, higher gross margins will enhance the company's product values and profitability. The end of 2007, the company round on the assembly line is expected to start production, will further enhance the company's product mix and improve gross margins.
Note that the risk of short-term volatility, maintain long-term rating of Recommended. We expect the company's earnings per share were 06-08 years of 0.50 yuan, 0.70 yuan and 0.90 yuan. In view of the company in 2006 earnings may be lower than the original market, is widely expected to 0.55, we recommend investors to note that the short-term price volatility.
