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Data:2009-12-12 2:34
Source: Securities Times Author: Ben-hu
A high degree of industry, highlighting the status of the economy
Wire and cable industry as a traditional manufacturing industries, due to the diversification of products, making the entry threshold is not high, but also become a highly competitive industry. To preliminary statistics, China's existing wire and cable entrepreneurs, had reached 5,000, or even more. At the same time, the industry has maintained a relatively high degree of prosperity.
Statistics show that wire and cable industry since 2003, the average annual growth rate of more than 25%. We believe that the 2004 and 2005, more than 30% of high growth on the one hand and the demands of the industry a boost on the other hand, raw material prices also caused the output and sales growth. We judge, without taking into account the factors of prices of raw materials, the wire and cable industry, although the growth rate after 2007 would decline, but demand growth will continue for at least 10%, and at a relatively high level.
Bao-Sheng shares (600,973) is a holding subsidiary of Bao Sheng Group, a listed company's assets is the best part of the Group's assets. Group of domestic wire and cable industry, one of the large state-owned enterprises and its main products are power cables, communication cables and special cables.
Position from the industry perspective, the industry group has been in the forefront. According to machine through the network statistics, in 2005, Bao Sheng Group achieved sales revenues and profits simultaneous rapid growth in sales revenue in the industry, ranked No. 3, is one of the leading cable industry (see table).
If you use the same statistical standards Baosheng group represented by the shares of income ratio exceeds 80%. Therefore, the Group's advantage to a certain extent also reflects the advantages of a listed company.
Performance is expected to exceed market expectations With the pressure generated by the project effectiveness and low-voltage power cables, product structure adjustment, the company greatly increased in 2006 almost no suspense. The company's current order is adequate and exceeded our expectations. Among them, low-voltage power cables than-expected sales of nearly 200 million yuan. Expects third-quarter revenue more than 700 million the first three quarter revenue more than 1.6 billion, an increase of over 80%.
Orders currently in hand, the number of 12 billion yuan, mainly in the low-voltage cable, fire cable and railway cables, about 10 million or so will be completed by 2006. Following the successful Capital Airport, Shanghai Pudong International Airport, the Shanghai metro and light rail, Formosa Plastics and a number of projects have won the bid, the overall situation was better than market expectations. Over the whole year is expected to be approximately 1.9 billion to complete the scheduled target.
In addition, following the coal company's certification, classification societies certified, the State Civil Aviation Administration of airfield lighting cables, network access authentication has been received in July, the company's continued growth in order to obtain the formation of strong support.
Growth in the Bird's Nest to lay the basis of the project Baosheng Shares October 10 issued a notice, companies and international engineering contracting companies, Guohua signed the 2008 Beijing Olympic main stadium National Stadium project (Bird's Nest) procurement contract documents two, which "irradiated cross-linked low smoke halogen-free cable procurement contract "amount of 64.79 million yuan," Mineral insulated cables procurement contract "amount of 14.21 million yuan, the two total amount of procurement contracts, 78.99 million yuan, the delivery date from December 2006 to 2007 year in March.
The new contracts the company signed two major points: First, the contract value larger will be the 2007 performance of an important foundation for the growth factor. Notice the two mentioned in the contract total amount of nearly 80 million, for cable products for the larger part of the contract; Second, the project is the company a high-strength, one of the best interpretation. Bird's Nest Project as a national landmark, the project won the bid fully reflects the company's competitive strength in the industry.
In the current valuation is significantly lower from the first device major domestic enterprises are concerned, in 2006, the average price-earnings ratio of 27 times, Po-Sheng shares 14 times price-earnings ratio significantly lower.
We believe that the equipment company as a leading sub-sectors, although the capability of independent innovation, degree of value-added products and industry oligopoly, such as G-ping is not high and G Tebian have an advantage, but the company until 2008 for the foreseeable 30 % of high growth and decided to enjoy the company still has a relatively high price-earnings ratio of the valuation basis.
At present, the level of high electrical, TBEA of PEG were 0.8 and 0.9, while the shares of PEG Baosheng only 0.5, significantly lower valuation. Yi-Ping Gao Institute of Electrical and TBEA valuation as a reference while giving Baosheng 10% -15% stake in the valuation discount is relatively reasonable. And even if is to give 20% -25% of the large discount to forecast EPS estimates for 2006, Po-Sheng shares are 20-22 times the target PE, the corresponding shares of 9-10 yuan.
In view of the progress of company's business exceeded our expectations, we raise profit forecasts, without considering the case of capital expansion, expects 2006 EPS of 0.545 yuan, in 2007 EPS of 0.776 yuan, the corresponding PE, respectively 15 times and 10 times the . Projections based on 2006 performance, Po-Sheng shares the goal PE of 20 times, the corresponding share price of 11 yuan in the vicinity. Even with a 10% discount, target price is 10 yuan from the current levels of around 25% of the space, and we maintain the "strongly recommended" investment rating.
