Category: Money Tips Date: 2006-09-03
Investment Highlights:
Handan Iron & Steel Group acquired the company-owned power plants, thermal plants, production and management of transportation assets as well as in construction projects "in the board New Line" relevant assets, the company headquarters will be close to an annual output of 6.2 million tons of steel.
From the Handan Iron and Steel in the third quarter released last week, the top ten shareholders of view, concerted action by Baosteel Group are currently holding is 14,016.68 shares, 5.02% of the total share capital. Baosteel Group, the company that wanted to buy secondary market Handan Iron & Steel (600001 market, information, reviews, search) was established in theory, but in fact will not work.
In terms of size, the company has always been at the 11,12 position; from process product structure, the company's technical equipment is first-class grade, sheet and strip more than 70%, ranking second group vanguard position.
In 2007, the company's steel production is expected to reach 6.2 million tons, according to profits of 300 yuan per tonne basis, the company's total profit of 18.6 billion yuan, according to 24% of new income tax basis, the net profit of 1.4136 billion yuan; while in 2007 earnings per share were 0.506 yuan, the corresponding price-earnings ratio of 12.19 times, compared to other steel stocks in terms of valuation levels are still a certain degree of underestimation.
Should the acquisition of Wuyang Iron and Steel, it will add production of 1.5 million tons, the new net profit of 380 million yuan (based on 24% income tax calculations), thickening of 0.136 yuan per share, plus 0.506 yuan, a total of 0.642 yuan.
We selected a conservative rating of the company. Steel shares currently trade at 14 times, 14 × 0.506 CNY = 7.08 yuan, 6.17 yuan at the current share price calculation, as well as 14.7% increase in space, therefore, short-term to give the company a "cautious recommendation" investment rating.
First, the purpose of research
Handan Iron & Steel (600001 market, information, reviews, search) the recent share price strength, short-term increases in larger, so we conducted field visits to the company.
1, the company's future production capacity whether there will be more substantial change?
2, the company which mergers and reorganization plan?
Second, views on the issue of the research and judge
January 24, 2006, I visited the Handan Iron & Steel Co. Ltd., Wang Junjie, general manager with the stock company, the securities transaction on behalf of Chen Zhan-jun face to face communication.
1, the company headquarters over the next two there will be no significant increase in output
It is understood that the company acquire Handan Iron & Steel Group Company-owned power plants, thermal plants, production and management of transportation assets as well as in construction projects "in the board New Line" relevant assets, the company's annual output of steel will be close to 6.2 million tons. In 2006, the group expected to achieve sales of 28.0 billion joint-stock company's net profit will more than 900 million yuan.
Wuyang group holding an annual output of 1.5 million tons of steel plate, there is currently no load shares of the company's plans; and 5 million tons of construction of new districts by mid-2008 only completed the first phase of the project and can not form a new capacity.
Therefore, the shares of the company if there is no injection of new assets, then the next two years, there will be no more substantial production growth.
2, the company mergers and restructuring plans yet
From the Handan Iron and Steel in the third quarter released last week, the top ten shareholders of view, concerted action by Baosteel Group are currently holding is 14,016.68 shares, 5.02% of the total share capital. Baosteel Group, the company that wanted to buy secondary market Handan Iron & Steel (600001 market, information, reviews, search) was established in theory, but in fact will not work. Because of China's steel industry, the case of trans-regional mergers and acquisitions, mostly led by the government. If Baosteel attempt to force the secondary market acquisition, Handan Iron and Steel Group will not stand idly by. In addition, the company said so far the company has yet to provide merger and reorganization plans.
3, the company positioned in the steel industry, the second group of pioneers
In terms of size, the company has always been at the 11,12 position; from process product structure, the company's technical equipment is first-class grade, sheet and strip more than 70%, ranking second group vanguard position.
Third, research firm profit forecast
In 2007, the company's steel production is expected to reach 6.2 million tons, according to profits of 300 yuan per tonne basis, the company's total profit of 18.6 billion yuan, according to 24% of new income tax basis, the net profit of 1.4136 billion yuan; while in 2007 earnings per share were 0.506 yuan, the corresponding price-earnings ratio of 12.19 times, compared to other steel stocks in terms of valuation levels are still a certain degree of underestimation. Should the acquisition of Wuyang Iron and Steel, it will add production of 1.5 million tons, the new net profit of 380 million yuan (based on 24% income tax calculations), thickening of 0.136 yuan per share, plus 0.506 yuan, a total of 0.642 yuan. Thus, in 2007 the company's earnings per share theoretical maximum of 0.642 yuan.
Fourth, the adjustment of the company's rating
1, a conservative rating: "cautious recommendation"
Steel shares currently trade at 14 times, 14 × 0.506 CNY = 7.08 yuan, 6.17 yuan at the current share price calculation, as well as 14.7% increase in space, therefore, short-term to give a "cautious recommendation" investment rating.
2, optimistic rating: "Recommended"
Steel shares currently trade at 14 times, 14 × 0.642 CNY = 8.99 yuan, 6.17 yuan at the current share price calculation, as well as 45.7% increase in space, therefore, short-term given the "Recommended" investment rating.
5, in particular the risk of tips
1, the company's future performance and the trend of steel prices and the original fuel prices are closely linked, due to the uncertainty of future trends in steel prices and raw material and fuel prices cause increase in cost, both will have great impact on company performance.
2, given the company's "asset acquisition" uncertainty about the future, our valuation is a theoretical sense, only as an investment for reference, not as an investment basis.
3, the company warrants (580,003, Handan Iron and Steel JTB1) will be presented along with the regular stocks fluctuate in the same direction, and have the leverage at the same time to maturity about 2 months time, the risk of greater Investors are cautioned stock warrants risk.
