Category: Money tips Release Date: 2007-04-20
Analysis and comments:
(1) The company's annual results in line with expectations Chengxing main revenue share in 2006 to achieve 1.585 billion yuan, down 2.14%; main business profit of 208 million, an increase of 29.32%; 6687.67 yuan net profit, earnings per share 0.17 yuan, up by 30.11%. Fourth quarter alone, 457 million yuan to achieve main income, net profit 22 million yuan, 0.033 yuan per share, basic line with our expectations.
Company's four basic and three-quarter-quarter gross margins were flat, due to heavy investment in Yunnan project, short-term liabilities increased by 2.4 billion yuan, the financial cost of a relatively substantial increase in four quarters, the company now is applying for 400 million yuan convertible bond issuance is expected in 2007 the first half of convertible bond issues, the finance charges can be dropped significantly. Phosphorus chemical product prices into the stable period, the company reduced inventory to decline in value of management costs declined.
As the fourth quarter of phosphorus supply to the market tight, taking into account the spring tension in the transport, the company ordered an advance payment is more than the beginning of raw materials rose by 1.3 billion yuan, up 44.5%, while inventories of raw materials brought about an increase of 1.96 billion yuan, up by a big margin .
The company announced in its annual report sent to three shares of 10 shares of stock were 0.5 yuan Zhuanzeng 3 of the distribution program.
(2) Yunnan Phosphorus electrical integration, installation proceeded smoothly, the downstream market is gradually opening Maitreya in Yunnan technological transformation of the 30,000 tons yellow phosphorus production has been completed, Xuanwei of 150,000 KW of thermal power, and 60,000 tons yellow phosphorus devices also basically completed the construction of Some have entered pre-production, the company plans in 2007, one quarter completed. Since Yunnan Province will gradually straighten out 500,000 tons of phosphate under Hill, the company's Huize handsway, Yiliang and the Stone Forest exploitation of mines will expand the scale and Huize longwei Zhanyi handsway will gradually mining ore.
Toothpaste grade calcium hydrogen phosphate in 2006 achieved a steady growth in sales, the company gross margin was the highest (30%) of high-purity phosphoric acid in 2006 to achieve 50% sales growth, due to the user's access to two of Taiwan's new orders are expected in 2007 and 2008 years, there will remain more than 40% growth. The company plans to bring in international talent, the effective possession of phosphorus resources, increase R & D investment to achieve global operations, among the "Global Phosphorus Chemical Industry before the semi-finals."
Although December has been due to water entering the dry season in Yunnan, coupled with a large number of corporate restrictions on electricity Yunnan, Guizhou, Sichuan stop production, leading to yellow phosphorus prices began to rebound in the current business ex-factory price in the 10.8 thousand yuan / tons. The domestic yellow phosphorus industry, intense competition, despite the phosphorus decreased cost and the cost of electricity is difficult, but because of the major producers seeking low-cost electricity as well as Chengxing integration of large-scale installations such as the construction of a significant pick-up in yellow phosphorus price difficult. Phosphate rock resources it takes and high-end development of phosphorus chemical products will be the focus of future enterprise competition.
(3) National rectification of mineral resources will be conducive to superior enterprises in the industry recently, Land and Resources, the National Development and Reform Commission jointly issued by nine ministries and commissions, "the integration of mineral resource development view", will use economic, legal and necessary administrative means to , combined with industrial policies and industrial restructuring needs, through the acquisition, shares, merger, etc., according to the law of the mining enterprises and mining of mineral resources exploitation of factors of production enterprises to restructure, and gradually form a large-scale mining groups as the main body, the coordination of all sizes Mine the development of a new pattern of mineral development. Integration ranging from coal, iron, manganese, copper, aluminum, lead, zinc, molybdenum, gold, tungsten, tin, antimony, rare earths, phosphorus, potassium and other 15 important minerals.
Integration will be based on the "large and small, the superior and inferior," the principles of the natural occurrence based on the resource situation, follow the rules of market economy, combined with enterprise reorganization, restructuring, transformation to large-scale and technology, management, and equipment with high levels of mining as a principal, integrating other mines. Relevant departments of mining rights will be prepared to set the program, re-division of mining area to determine the scale of mining, a mine just set up a mining right to solve the big mining Little Cayman, a mine to open up other issues.
We believe that given the national consolidation of small mines, phosphorus and potassium and other mineral resource prices will continue to rise in the next few years, the industry dominant enterprises, such as Chengxing shares and the proceeds from the Hing Fat Group.
(4) maintaining the "recommended" rating in the completion of the upstream mining, phosphorus, electric resource acquisition, the future as production capacity and efficiency, the cost of a sustained decline in the upstream, while downstream fine chemical products phosphorus can promote the extension and broadening performance of the company growth. We maintain the company in 2007 and 2008 earnings estimates.
We believe that the company has advantages in resources, the next few years could benefit from phosphate rock and phosphate chemical industry consolidation, while beginning in 2007, the company entered a period of rapid growth in earnings, the company can enjoy a higher valuation. Despite the short-term stock price rose more, the current valuation lower than the international comparable company Innophos (2007 22 in times of PE, 2008 Nian 15.5 times PE), while company profits have exceeded our expectations possible. Maintain the "Recommended" rating.
