Review of the 2010 and first quarter results of 2011:
Shanxi 3D released its 2010 annual report, which is lower than we expected. The company realized operating income of 2.785 billion yuan, up 23% from the same period last year, and net profit of 33 million yuan, up 209% from the same period last year, or 0.07 yuan per share. The company will not allocate or increase in 2010.
At the same time, the company announced its quarterly report for 2011, with operating income of 1.086 billion yuan, up 104% from the same period last year, up 9% from the previous month, net profit of 14.84 million yuan, year-on-year reversal of losses, and earnings per share of 0.03 yuan.
Front:
The supply and demand of the company's main product BDO is tight, and the price has entered the upstream channel, with a cumulative increase of more than 20% this year.
At present, the company's product PTMEG is in short supply, and the price continues to rise. As the downstream spandex production scale is more than 30 per cent this year, it will drive PTMEG demand upward, and the PTMEG market faces a gap between supply and demand. The company's 30,000 tons of new PTMEG production capacity put into production in October this year will thicken the company's profits.
Negative:
The supply of raw material calcium carbide in the company is tight and the price continues to rise.
Development trend:
In addition to BASF, the company is the first company with two production processes of Reppe and maleic anhydride, with strong technical advantages. Driven by the capacity expansion of PTMEG and PBT in the next 5 years, the prosperity of the BDO industry is expected to continue to recover.
Profit forecasts and investment advice:
We expect the company's EPS in 2011 and 2012 to be 0.22 and 0.30 yuan, corresponding to 57 times and 43 times PE, respectively, and we maintain a "neutral" rating. In the future, as BDO prices continue to pick up and quarter-on-quarter performance improves, share prices have trading opportunities.
Risk:
1. The prices of major products have dropped.
2. The supply of coke oven gas is insufficient.
3. The market valuation center is downwards.