Zinc products are the company's main source of revenue and profits. At present, the company has a comprehensive production capacity of 60000 tons of zinc ingots, 3 tons of germanium, 7500 tons of sulfuric acid, 300 tons of cadmium, 800tons of lead slag, 2.5tons of indium, 12000 tons of ultra-fine zinc powder and an average annual generating capacity of about 240 million kilowatts. However, the company's data over the years show that zinc ingot products are the company's main source of revenue and profits.
At present, the only co-production enterprise of mining, electricity and smelting in the domestic zinc smelting industry. The company has established a leading product industry chain with the combination of "electricity, mining and smelting", and the comprehensive operating income is obviously higher than the sum of the individual operating income of each asset, achieving the effect of "1x 1 > 2". The optimization of production and management mode and the maximization of comprehensive income are realized.
After the fund-raising investment project is completed and put into operation, the company's zinc ingot production capacity and application process will reach a better state. The 60,000 t / an electric zinc technical renovation project can effectively expand the production scale of the company's zinc ingots, improve production efficiency and expand market share; the implementation of the oxygen pressure leaching process technical transformation project can enable the company to use high-iron sphalerite with abundant reserves in Yunnan but with high smelting difficulty as raw material, which can effectively reduce the company's low zinc smelting cost and eliminate the operating risks that may be brought to the company by adverse fluctuations in zinc prices.
The average price of zinc metal in 2007 is expected to be higher than that in 2006. The supporting effect of the whole macro environment on metal prices has been weakening, but it is not possible to judge whether there has been a substantial change. We believe that the good fundamentals of the zinc industry are expected to support the average price of zinc metal higher in 2007 than in 2006.
It is predicted that the fully diluted EPS of the company in 2006 and 2007 is 0.78 yuan and 1.05 yuan respectively. On the whole, we think that the pricing of 14,16x PE should be reasonable for the company. Based on the EPS of 2006 and considering the 15% discount on issuance, we recommend that the inquiry range of the company is 9.28 to 10.60 yuan. At the same time, it is estimated that the price range of the company on the first day of listing is between 12.50 and 15.75 yuan.
