Wei Wei Source: Days congenial care Source: Vertex Financial
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to create a unique closed circular economy industrial chain, with China's first state-level ecological demonstration coking industry, industrial parks, on behalf of the new trend of development of the industry. intraoperative finding the money to the apex financial shake
listed as the leading export of coke enterprises will directly benefit from a substantial increase in international prices of coke, the coke export price of the company in October has reached 300 dollars, almost 2 times the price early, the annual export of coke this year more than 50 companies million tons, essentially flat with last year.
companies to accelerate products to the efforts to control the upstream resources, access to 15.97 million tons of iron ore mining rights, have formed 10 million tons of production capacity, annual output of 600 tons of shares of large coal mines, will directly push down the company's future production costs.
coke production capacity next two years the company expanded rapidly, self-built production capacity of 110 million tons of coke production in the next couple of years to ensure that the next two years the company maintained more than 30% of coke business high-speed growth. Vertex Financial topcj.com
As the state of Integration of a strong position in the.
07,08,09 we expect earnings per share the company are: 0.52 yuan, 0.80 yuan and 0.92 yuan. net profit rose 67.69%, 53.22% and 15.72%. We believe that Coke industry business cycle will continue, coke prices may exceed expectations. In addition, the company constantly improve the industry chain will gradually increase the profitability of the company to achieve high added value. the company in 2008 a reasonable PE of 35 times the target price : 28 yuan. given to pig iron, cement, electricity production and sales, currently has 160 million tons of coke, 90 tons of pig iron, 10 tons of cement production capacity and 7.4 million kWh of installed capacity; In addition the company also built 110 million tons of coke production in (of which 55 million tons production capacity is expected to achieve next year, and table), 1597 tons of iron ore mining permit for coal and 13 million tons of 49% of the shares.
1.2's unique industry chain
1.2.1 the pioneer of recycling economy construction and practitioners, representatives of industry trends
create circular economy industrial chain.'s current industry chain starting from the coal and iron ore, extending development to the coke, pig iron, power, cement, coking and by-products Six civilian fuel export product, with the company completed the resulting chain can not be achieved external sales of products such as coal gangue, slag, coke oven gas and blast furnace gas and raw materials as the industry chain to achieve inner loop, effectively forming a inter closed chain of products, a complete change of the the first pilot park, is also China's first state-level ecological demonstration coking industry industrial park. circular economy industrial chain construction conforms to the changing pattern of national development, will win the competition for the company's future opportunities.
1.2.2 build composite -type chain, creating a sound business environment
independent coke enterprises more special industrial chain. the company building the industry chain, the main products of the industrial chain, did not choose a single conventional coke enterprises industrial chain, and adopted a bargaining power, so the choice of business strategy is more flexible. shake the money technique: the dark horse breeds temper
addition, the company's products for the treatment of coke is also quite innovative, first for the use of coke oven gas, do not use the majority of projects or enterprises to adopt the residents of ethanol gas, but the coke oven gas as a generation of raw materials, lower production costs while locking the product risk.
company actively construct the third chain. for the present coke production capacity still can not meet the large scale chemical processing needs of the actual situation, the company took for the coking project sound into the strategy, the company plans when the coke production capacity to 300 million metric tons, will start the downstream development strategy, annual output of 50 tons of coal tar, 30 tons of coke oven gas projects and clumsy refined methanol project, the establishment of the company's third chain.
oil will remain high long-term trend, coupled with the state promulgated the Look, coal chemical industry for the better. But there is more coal chemical industry is still uncertainty in the second half of last year began to seek the views of the chemical approach is still uncertain, with the coal chemical industry as a whole is still constrained by the technology maturity, in the current domestic enterprises high level of enthusiasm for the coal chemical industry, the large-scale use of risk is still greater loss of sound into a wise choice is to reduce .
2. The company has stable and good profitability
2.1 product quality, enhance profitability
enhance the company's brand value. The company's main product is a metallurgical coke, and enjoy high reputation , the production of the , but the company's current sales momentum of coke is still good, but the market from 2006 to an average price of metallurgical coke metallurgical coke has been 50 for two yuan premium level. with respect to general business, the quality is stable, Coke reputable companies, and its against the industry growth cycle fluctuations and the ability to improve performance will undoubtedly be stronger.
2.2 active extension products to upstream resources, push down the company's cost
access to iron ore mining rights. Company 04 awarded Liang Zhen City, Shanxi Province, the original God of flat rock gully iron ore prospecting and survey, the exploration of proven iron ore reserves of 15.97 million tons. the company has made in February 2006 issued by the Shanxi Provincial Department of iron ore mining license, has formed about 10 million tons of iron ore production capacity.
domestic iron ore prices this year hit a new high in August compared with the beginning of the domestic iron ore prices increased by 35%, while the entry September iron ore market price is almost out of control, chain rose 16.5%, the average price climbed to 1,200 / ton or more, the case of high iron ore prices, the company's iron ore resources, so that the future of pig iron cost advantage is obvious .
.2006 shares of coke enterprises through equity participation in Shanxi Fenxi Thai company, with 13 million tons of coal resources, 49% of the shares. The project plans to build 600 million tons of coal companies and related coal preparation plant, expected by the end of 2007 construction, will be put into operation in 2010, coal production, the supply of coking coal at the same time ensure that the company will be reducing the cost of coke production, play a positive role.
2.3 coke export prices rose sharply, the company gains access to the excess stability
is the proceeds of export prices were high. the company last year exported about 560,000 tons of coke, the next two years is expected to be essential to maintain last year's level. company coke export volume remained unchanged, the export price of coke significantly improved by the beginning of this year already 170 U.S. dollars / tonne in January rose to 10 300 dollars / ton, and with the coke export quota of domestic enterprises have decreased the number of coke export business will be the company to ensure a stable income, transfer of domestic Coke important means of market volatility risk.
According to statistics, in August this year, China's coke price reached $ 224 FOB / ton, up 49% over the beginning. milch cows teach you roll the money under the operation
and 1 - August, total coke exports up 12% of the cases, the average export price of coke surged 35% year on year. Since the coke export quota restrictions by the market for coke export volume is expected to decline further enhanced, and national plans to Coke Q4 export tariffs from the current 15% to 20%, the coke export price during the year to further the high possibility of China's coke export price of .2004 was a record 400 U.S. dollars / ton, so that the world price for the coke would exceed the capacity of expected increase in export price of coke is still room for more.
world coking coal resources are mainly concentrated in Australia, Canada and China, due to the developed countries in recent years by increasingly stringent environmental protection policies, India to speed up the process of industrialization (the relative lack of coking coal reserves in India, mainly rely on imports of coke)
impact of rapid growth of China's coke export volume from 1991 to 108 million tons to 14.5 million tons in 2006, China's coke export volume accounts for about half of the world, including Europe's coke 1 / 3 of the demand comes from China, Coke has become one of the few international bargaining power of the commodity. However, with the state the establishment of future export volume and export of coke there was a reduction the number of firms is very determined. The world trade pattern coke significant changes in the short term difficult circumstances, that the future world will gradually tightening market supply and demand of coke, coke export price will remain high, a large drop is unlikely.
company has excellent growth potential
3.1 rapid expansion of coke production capacity for high growth performance of the company to escort
new coke production capacity of the next two years in succession running. Coke as the company's contribution to the main source of profit, its ability to rapidly growing the company's future growth will play a decisive role. the company as a key support of Shanxi coking three leading companies, the future development goal is to coke production capacity to 500 tons, the company now has 160 million tons of coke production capacity, build 110 tons of coke, of which 55 million tons production capacity built in 2008 is expected to put into production in 2009 will reach another 55 million tons are produced. deducting the company integrate external coke production factors and price fluctuations, self-built only rely on the company's current production capacity to enable the company to keep the coke business in more than 30% compound growth rate of the rapid growth.
3.2 can be expected into the steel assets would be increase the company's new profit growth point
shareholders commitment to the company before the end of 2008 into the steel assets is to solve one of the options related party transactions. Li Anmin holding company and chairman of the existence of pig iron Xintai Iron and Steel Company sales related transactions, related party transactions accounted for approximately 50% of total revenue.'s commitment before the end of 2008 by the ING Group acquired the assets and business of Xintai Iron and Steel is one way to solve the related party transactions.
Xintai Iron & Steel is currently in the construction period, the existing 100 million tons of continuous casting steel billet production line, 120 million tons in the construction of the beam blank line is expected to put into the second half of 2007, also will build 1.2 million tons of construction steel H project, with the new project into production, the company expects 07 net profit of 1.5 billion years or so, in 2008 net profit of 2 billion yuan. according to the company's current stock price, issuing 100 million shares is expected to acquire assets for the company's earnings per share will be thickening of 0.4 yuan.
3.3 domestic coke prices continue to climb, but still has room to rise
according to Commerce Department statistics, the domestic coke price in October reached 1,525 yuan / ton, up 20.2% year. coke price since February 2006 after falling into the trough, and gradually stabilized, then began to pick up the coke industry has shown .2007 volume and price go situation. According to statistics, 1-August output of 210 million tons of coke the country, an increase of 20.1%, while the average price of coke rose over the beginning of 15%.
2007 In February, the company set up a coke in Shanxi Province where the consortium, Shanxi, Hebei, Shandong and Shaanxi in the 212 coking enterprises have become the first federate (2006 years ago, three coke producing province, 160 million tons, accounting for the yield 55%). Union set up, no doubt increased the coke industry voice. This year, Shanxi Coke Association-led price increase three times, gained 200 yuan / ton, the overall recovery of coke enterprise gross margin.
this round of price increases of coke, the dominant factor is the cost-push. As for the coal industry in Shanxi Province this year, impose a beginning of the year rose 100 yuan, 1.4 tons of raw coal production by 1 ton of coke calculation, thereby increasing the production cost of coke 140.
by the cost-push price increases, often rigid, are less likely to price a correction . and this year, steel and coke, calcium carbide industry growth rate downstream is not 1-August was down coke accounted for more than 87% of the total consumption of iron and steel industry, crude steel, pig iron production increased by 13.6% year on year and 15.9%, the coke prices still have support.
1.4.4 Coke industry consolidation around the corner, shutting down public companies benefit from the small coke enterprises
.2004 1,400 domestic coke enterprises, 19 million tons coke per family property.
for Coke small scale industries and enterprises, pollution is serious phenomenon, the National Development and Reform Commission in 2004 and 2006, has issued a By the end of shutting down obsolete coke capacity of nearly 40 million tons of soil, small machine coke production capacity of about 1,000 million tons, the proportion of the national machine coke production in 2001 from 70% to 90%, the proportion of soil coke from 30% to 6%. However, the current Development and Reform Commission announced the first batch, second batch of 108 substandard coking coke production accounts for only about 40% of the total output of coke situation, industry consolidation will continue to be.
Shanxi Province to Coke enterprises bigger and stronger. with 31% of the national coke production, coking coal reserves of 60%, 90% of exports of Shanxi Province has promulgated the coking illegal construction projects in 2005-2007 to conduct a comprehensive clean-up and shut down, while the provincial government clearly
do that from 2005 to 1000 the number decreased to 150 or so more than the average size of 60 million metric tons, the development of comprehensive utilization of more than 10 large coking enterprise groups, fostering two more than 10 million tons of coking Group. and Shanxi Antai Group, as the current 3 listed one of the coke, the financing instruments and financing costs than the listed companies do not achieve an advantage, it will greatly benefit from industry consolidation.
4. the risk of revealing macro risks. coke industry is ; two high a capital concentration rising, the coke industry will squeeze margins, especially as 80% of the cost of coking coking coal are scarce in China, with the variety of state control of scarce resources, increasingly stringent, the cost is rising predictable, are likely to form the upper reaches of the risk of rising costs eroded profits.
form of stagflation risks. the coke industry is currently a basic balance between supply and demand, higher prices will suppress coke coke demand, while coke prices is limited, giving rise to the industry stagflation .
excessive concentration of risk products. Our main income comes from the coke and pig iron, the products are strong cyclical fluctuations, so vulnerable to economic fluctuations in the macro side.
risk of local protectionism. coke industry long-term health development depends on the integration of its own adjustments, the scale of the rise of the coke business, but the coke industry as the main source of local revenue, br> 5. profit forecast earnings forecast premises and assumptions:
1) 2007, 2008 and 2009 production was 160 million tons of coke, 2.15 million tons, 270 tons of coke business, gross margin was 24.64%, 25.72 %, 24.69%; maintain 950,000 tons of pig iron production, pig iron business of the gross profit margin to maintain 12.23%.
2) price, 07,08,09 on the domestic coke prices were 1,100 yuan / ton, 1210 yuan / ton, 1210 yuan / ton, the export price is 1360 yuan / ton, 1560 yuan / ton, 1560 yuan / ton; pig iron price is 2051 yuan / ton, 2,153 yuan / ton, 2,153 yuan / ton.
3) tax rates, as the company enjoyed foreign income tax, income tax rates of 07,08,09 and 25%. cash cow for shaking the money to see patients under the company valuation and investment advice
6.1 relative valuations and investment advice: 28 yuan a reasonable price, given the only representative of the company in the direction of the circular economy development of the industry chain, and is listed in the largest coke export enterprises, and the future of coke export price exceeded our expectations very likely, and the company in 2008 into the iron and steel assets may is high. We offer a 10% premium to the company level, corresponding to a reasonable 08 times the dynamic price-earnings ratio is 35, the target price of 28 yuan, compared with the current price of 19.4 yuan, 44% upside, given to rating.
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