Category: Money Tips Date: 2006-05-22
We think we can improve the company's valuation or the value of the company's future the most important driving factor is: 1, continuous technological advances and upgrade the product structure, product growing in the high-end; 2, from the simple transformer providers to integrated changes in transmission systems and engineering provider.
Company plans to Investment 3 billion will become part of the Shenyang plant to transform in order to have direct current converter transformer capacity is expected duration of 1 year to a year and a half, which will further enhance the company's products, and for the consolidation of the status of the industry leading to the transformer into the world's leading companies to lay a solid foundation.
We estimate that changed in 2006, Shen, 2007 revenues will reach 1.6 billion and 2.2 billion. In 2007 its product structure, the proportion of 500kV transformer will rise to 90%. Order structure, the rise in the proportion of high-end products is a major increase in revenue and profit momentum.
If the 2007 average price of copper for 6000 U.S. dollars / ton and the company completely not do hedge, in theory transformer cost of doing business than the company expected to fall about 100 million yuan. But in fact not the case: one, in order to prevent a possible rebound in copper prices, the company had to do a certain proportion of the existing order of the hedge; 2, after the new single is likely to sign with the drop in prices of raw materials declined.
VAT refund policy in northeast China will benefit Shen change. Is expected in 2007 will receive a tax rebate in 2006 of about 2000 million yuan. At the same time as the greater use of R & D expenses 150% tax deductible in the policy, Shen change will greatly increase the amount of R & D expenses reported on the 2007 results have a positive impact.
We are, as always, firmly optimistic about the company's long-term development, taking into account the effect of the external positive factors likely to exceed our expectations, thus raising the company's EPS forecast in 2007 to 0.77 yuan, 06, and 2008 EPS to maintain the same 0.49 and 0.99 .
We believe that the company's recent share price rise from the impact of the market price of copper plummeted optimistic expectations. We believe that there will be more of the trigger factors have contributed to price rise, so continue to maintain "overweight" recommendation. Taking into account the recent market may be adjusted, it is still being maintained target price of 18 yuan the same, but does not rule out the possibility of future target price raised.
