Obvious regional advantages to protect the company's profit base.
The company is the largest urea production enterprise in Guangxi. Due to the short supply of urea in Guangxi, the company enjoys the benefits brought by regional advantages. The company is also the only manufacturer of ammonium nitrate and concentrated nitric acid in Guangdong and Guangzhou, with a gross profit margin of about 25%, which is the main source of the company's profits. Downstream demand for electronics, papermaking and infrastructure construction in southern China maintained strong growth, driving the prices of ammonium nitrate and concentrated nitric acid to remain high and boost the company's profitability.
Hydrogen peroxide has become a new profit growth point for the company.
The company's holding subsidiary has a production capacity of 200000 tons of hydrogen peroxide, the demand for hydrogen peroxide in South China is strong, and the price of hydrogen peroxide is rising continuously. This part of the asset profitability is good, contributing 53% of the company's net profit in the first half of the year, becoming a new profit growth point of the company.
The coal mine is expected to go into production next year, reducing the company's costs.
The company's coal mine will be gradually put into production next year, and we expect the output to reach 200000 tons next year, increasing the company's raw material self-sufficiency rate and reducing the company's production cost. The company's coal mine production capacity is expected to continue to expand and further reduce production costs.
The CDM project is expected to be realized next year.
The company's CDM project is awaiting approval from the United Nations, and revenue is expected to be confirmed next year, which is expected to increase the company's net profit by 20 million per year and increase EPS0.05 yuan.
We believe that as the formal commissioning of the coal mine next year will significantly increase the company's profits, and with the full release of production capacity, the performance will increase rapidly next year. It is estimated that the company's EPS in 2010, 2011 and 2012 will be 0.22,0.76,0.93 yuan respectively, and the corresponding PE will be 53.27,15.42,12.6 times, maintaining the company's "overweight" rating.