Category: Money tips Release Date: 2006-06-12
Investment Highlights:
The world's largest manufacturer of dyes
4.3 billion asset size of Zhejiang Longsheng Group Co., Ltd., the main production and operation of Longsheng brand dyes, additives, chemical intermediates such as the three major categories over 360 varieties, annual production capacity of 150,000 tons, is the world's largest dye manufacturing and export base, the domestic dyestuff industry leading enterprises.
Dye industry: colorful rendering a better future
2006 Environmental constraints of small dyes is very conducive to enterprise development, dye leading corporate profits growth, with the small businesses out of dyes, dye prices continued to rise in 2007 prices have continued to bullish dye.
To benefit from the rapid growth in demand for cotton fabrics, reactive dyes demand for substantial growth
Reactive dyes are the most important cotton dye types, because the future is still optimistic about the development of cotton fabrics as well as the gradual substitution of imported products, the next three years, demand for reactive dyes are expected to remain around 20% growth.
The cost of a substantial decline in oil prices
International oil prices since last July have fallen nearly 80 U.S. dollars to 50 dollars at present near the dyestuff industry in 2006 for all illusions about the oil situation in 2007, will cease to exist, is expected to disperse throughout the year 2007 gross margins due to oil prices rose 4.08 percentage points year on year decline, reactive dyes-year gross margin rose by 3.4 percentage points.
Technological advantage to make more perfect colors
Run-soil chemical will be reminders to make stock market increases: Zhejiang Longsheng = current price to buy the whole subscription of new shares in the ballot
Profit Forecast: 2006EPS0.35 yuan, 2007EPS0.50 yuan, 2008EPS0.65 .. global PE valuation of 10.73 yuan, the first target price of 10 yuan, 15 yuan long-term goals
Company's share price movements over the past year, Zhejiang Longsheng significantly weaker than the general trend over the past year or only 50%, while the Shanghai Composite Index had risen nearly 150 percent, the company shares should be compensatory growth afternoon.
1, the main business stand out: the scattered and reactive dyes constitute the pillars of
Zhejiang Longsheng chemical dyes is mainly engaged in the development, production and sales, with import and export rights, the main products are Disperse dyes (for polyester, acetate fiber, nylon and other fiber dyeing and printing), dyes (for cotton, rayon and other fibers and wool, silk and other protein fiber dyeing and printing, also used for leather, ink, paper), acid dyes (for wool, silk and other protein fibers and polyamide fiber dyeing and printing, can also be used in the leather, ink, paper and cosmetics, and food coloring pigment, etc.), chemical intermediates (for supporting various types of dyes) and auxiliaries (for disperse dye dispersion, filled). Various types of products the company a percentage of sales the following table, disperse dyes account for 44.94% of sales, reactive dyes account for 23.58% main income, dyes main business is very conspicuous.
Second, the leading and prominent position, the valuation should greatly enhance the space
The world's largest manufacturer of dyes
4.3 billion asset size of Zhejiang Longsheng Group Co., Ltd., the main production and operation of Longsheng brand dyes, additives, chemical intermediates such as the three major categories over 360 varieties, annual production capacity of 150,000 tons. Among them, an annual output of high-tech content, high value-added environment-friendly, high-intensity, fast dye Disperse Dyes Series 8 million tons, accounting for national and global output of 60% and 18%, the Department of the world's largest dye manufacturing and export base, the domestic dyestuff industry leading enterprises. Current product best-selling country and exported to the world's five continents in more than 60 countries and regions. Zhejiang Longsheng dye production, sales revenue, profits and taxes, export and foreign exchange indicators in the domestic same industry ranked first. China's annual output of more than 10,000 tons of dye manufacturers have 11: Zhejiang Longsheng Group Co., Ltd. (148,507 tons), Zhejiang Runtu Chemical Corporation (81,341 tons), Hangzhou Jihua Chemical Co., Ltd. (60,972 tons), etc. (see below table).
Can be seen, Zhejiang Longsheng scale advantages are clear, annual output more than the country's second largest manufacturer of above 82.57%. The company is not only the leading disperse dyes, reactive dyes series started that is targeted at middle-grade dye production, the current scale of production also reached China's first, due to good quality, has been in short supply situation. Acid dyes business to carry out the scale of production i.e. less than a year leapt to the national forefront.
The current A-share market attaches great importance to the industry leader, China's Sinopec has stood for more than 10 yuan on a given 20 times PE, Zhejiang Longsheng as China's dyestuff industry's largest companies, dye industry, there are nearly a thousand billion is a big industry, market capacity , its valuation should be up to 20 times PE (dye near the fast moving consumer goods, its valuation should be higher than the big petrochemical), it is 0.5 yuan, according to the 2007 projected EPS basis, the company's share price should have stood for more than 10 yuan.
Third, dye industry: colorful rendering a better future
2006 Environmental constraints of small dye business development, but help increase profits leading dyestuff
The dye industry in 2006 as the guy drunk, staggering along, finally reached the end of the year. 2007 dye industry will usher in a bright spring.
Review 2006: dye industry, full of turmoil and ups and downs.
As the international environment-friendly dyes for the increasingly stringent requirements, the domestic dyestuff industry in the era of reform and updating. As a dye, Zhejiang province, from 2004-2006, part of the month of production can be seen by, you can see a slight decline although some species, but generally at a stable stage. Since the "11.13" explosion led to the Songhua River pollution, a strong case under severe environmental crisis, many companies are dyes or face removal, a huge loss. States and cities along the river repeated demands, the pain resolved to intensify efforts to carry out environmental management along the chemical industry.
Although the Zhejiang than Tianjin, the Yangtze River is still as stable, but also facing removal, but the Zhejiang Longsheng early vision, has been completed early in 2006 to the new industrial zone of the strategic shift, and the company already completed the transformation of environmental protection facilities, Therefore, environmental limits and other small dye enterprises, on the contrary, the leading company is very beneficial. Because, as a small business out of dyes, dye prices on the rise.
2007: Dye prices are still bullish
The current upward trend of prices of dyes, dyes beginning of the year a general increase in prices of 2,000 yuan / ton. In particular, red blue dye prices rise significantly, for example, weak acid brilliant red B increased by nearly two yuan / ton, it is learned distributed up to a maximum 100,000 yuan Cuilan / ton, and there is no significant decline in performance. The main reason prices are environmentally friendly dye out of a small dye producers to make production declined. Dye prices have risen so that raising the cost of textile printing and dyeing, printing and dyeing enterprise, but not recognize the downstream customers, printing and dyeing difficult to raise product prices, if not to the high-end printing and dyeing enterprises in order to enhance cost-effective product development will seriously affect the dye market share. In view of the above discussion, dye industry in 2007 is still a good year of profit growth. Since the relocation, a variety of new equipment and high-tech will be the introduction of new products will continue to emerge in 2007 will be more to adapt to international and domestic rules and needs. Dye prices will steadily.
Common type direct dyes, acid mordant dyes will rise less than the reactive, and green dye will achieve greater development, natural dyes will lead to more interest in researchers. Because people need a variety of materials, colors, dyes feature will be excavated more to develop.
To benefit from the rapid growth in demand for cotton fabrics, reactive dyes demand for substantial growth
Reactive dyes are the most important cotton dye types, from the 2005 and 2006 point of view, China's cotton cloth, printing and dyeing cotton production have presented a rapid growth trend, reactive dyes, or only one of China's net import of dyes, due to are still optimistic about the future development of cotton fabric as well as the gradual substitution of imported products, the next three years, demand for reactive dyes are expected to remain around 20% growth.
Fourth, the cost of a substantial decline in oil prices
International oil prices since last July have fallen nearly 80 U.S. dollars to 50 dollars at present near the dye industry in 2006 to talk about all the oil discoloration, fluctuations in oil prices driven up the price of dyes intermediates, dyes intermediates, especially the price of NAPHTHALENE intermediate prices increased significantly. For example: H acid all the way up, since million per ton price of sixty thousand or so directly. The current decline in oil prices has already hit the majority of in situ dye intermediate prices by oil prices affect the company's main product gross margins will be substantially disperse rise (25-30% of exports) is expected to disperse throughout the year 2007 gross margin year on year rose 4.08 percentage point to 21% in 2007 full year gross margin reactive dyes increased by 3.4 percentage points year on year to 26%.
5, and technological advantages to make more perfect colors
Zhejiang Longsheng advanced production equipment, strong technical force, designed for a series of dry dye spray drying tower, the drying equipment with high efficiency, investment, production of stable product quality, characteristics, and have independent intellectual property rights. The latest build of the distillation column using the most advanced separation technologies for separation of some general methods are difficult to separate chemical products, from the fundamental solution to the previous chemical separation arising from the adoption of the environmental pollution problems. The company also independently developed and designed the most advanced production line, the use of high-speed centrifugal grading machine, high pressure homogenization machine and the granularity of the most advanced monitoring technology - laser particle size distribution meter, thus greatly improving the production efficiency, product Quality has also been greatly improved. The unique number of key technology companies, ranking the international advanced level. Supporting technologies in which the proliferation of agents, dispersion dyes diazotization of heterocyclic series significantly reduces the use of technology, production costs, use the year to 23 million yuan for the company earning profits. Reactive membrane technology to improve the purity of dyes and shorten the production cycle, reducing pollution up to 90% or more. In order to open up new profit growth point, to further improve the company's comprehensive competitiveness, according to product mix and market demand, the company's research and development of "using the world's newest low-pressure liquid-phase hydrogenation process system for an annual output of 5,000 tons of m-phenylenediamine project", the first in the country to achieve the industrialization of the process, the project put into operation, can significantly reduce product costs, improve product quality. The advanced level of technology the company is being produced by a variety of dye colors, coloring in prison, "Longsheng card" Dye enjoys a high reputation at home and abroad.
6, Run-soil chemical listed on the reminder to stock up
Annual output of 81,341 tons of Zhejiang dye Runtu chemical may be issued shares of listed companies, Runtu chemical half the size of Zhejiang Longsheng, while the technology is completely Zhejiang Longsheng is the production technology, performance and Zhejiang Longsheng similar, but the is now up to 23 times the IPO price-earnings ratio is about a chemical release, but after the listing Runtu price-earnings ratio will be 30 times higher than the current dynamic Zhejiang Longsheng only 11 times earnings, Runtu the issuance and listing of chemicals will dramatically pulled Zhejiang Longsheng stock (Run the issuance and listing of soil chemical there is a big uncertainty, please note that risk).
7, profit forecasts:
8, valuation of 10.73 yuan
We expect 2006,2007,2008 Zhejiang Longsheng year earnings per share were 0.35,0.50,0.65 yuan.
Consider the Chinese mainland, China Taiwan, the U.S. industry average valuation levels of about 21.45 times earnings, according to the company forecast 2007 results for 0.5 yuan terms, Zhejiang Longsheng a reasonable price should be around 10.73 yuan.
9, investment advice recommended
As a reasonable calculation of Zhejiang Longsheng 10.73 yuan share price should be near the current price of 5.43 yuan is significantly lower, the company is the world's largest manufacturer of dyes, QFII is very good, and the company is facing a decline in the cost of finished goods prices rise in good time, so we give Zhejiang Longsheng recommended rating.
10, the company significantly weaker than the trend over the past year the general trend of
Zhejiang Longsheng over the past year or only 50%, while the Shanghai Composite Index had risen nearly 150 percent, the company shares should be compensatory growth afternoon.
