Events:
Recently, we conducted an on-the-spot investigation of Lufeng shares and communicated with the management of the company on the company's Q1 and Q2 orders, construction progress of the investment project, future development planning and other issues.
Conclusion of the survey:
Qingdao Runfeng put into production to enhance double zero aluminum foil production, optimize the company's product structure: the company's existing aluminum foil production capacity of 90,000 tons, of which Qingdao Runfeng 50, 000 tons of high-precision aluminum foil production line in 2012 is mainly double zero aluminum foil products, last year due to the production line reached the initial stage, solid conversion and operating rate is low, resulting in high production costs, annual loss of 13.3797 million yuan. Considering the strong demand for high-end double zero aluminum foil at home and abroad, the product processing fee is higher than the traditional household foil and medicine foil, and the per ton processing fee is kept at 1.10-13000 yuan. With the end of the production run-in period and the increase in operating rate, Qingdao Runfeng 50,000 ton double zero aluminum foil production line is expected to improve the company's product structure this year. In terms of gross profit margin, the gross profit margin in the first quarter of 2013 has increased from 12.29% in 2012 to 15.58%. Improve the product structure to enhance the overall profitability of the company.
The 1IPO project is put into production and the trial production of the first phase of 450000 tons of aluminum plate and strip is expected to improve the company's aluminum plate, strip and foil product line: the 30, 000-ton aluminum foil production line invested by the company's IPO is expected to be put into production in the second quarter of this year. According to the company's production capacity planning, the 30, 000-ton aluminum foil production line will be docked with the first phase of the 450000-ton aluminum strip cold rolling project to form a complete aluminum plate, strip and foil production line. After docking, the whole production line forms an annual production capacity of 100000 tons of thick foil. This year, the production line is expected to achieve 50, 000 tons of thick foil production. At the same time, Qinghai Lufeng Xinheng 450000 tons of aluminum strip melting casting, hot rolling section of part of the equipment will also be trial production, is expected to increase part of the cast-rolling plate output, not only for this part of the cold rolling material can also be sold according to the supply and demand situation, Qinghai Lufengxin Heng Phase I melting casting and hot rolling products are mainly automobile body plate, double zero aluminum foil billet and automobile brazing heat exchanger composite aluminum foil. IPO investment project put into production, 450000 tons of aluminum plate and strip phase of the trial production project is expected to further improve the company's product line.
The improvement of capital structure and interest capitalization are expected to reduce the company's short-term interest expenditure: the company has actively laid out the industrial chain since its listing, and successively launched 50, 000 tons of high-precision aluminum plate and strip expansion projects, 450000 tons of aluminum plate and strip first-phase melting-casting, hot-rolling and cold-rolling projects. the new project has further improved the company's aluminum plate, strip and foil industry chain, but the financial costs brought about by high capital expenditure have also eroded the company's profits in recent years. According to the company, Lufeng in Qinghai is actively seeking policy support from the local government, and is expected to obtain a local project loan of 1 billion yuan, with a low cost of capital and interest capitalization, which is expected to improve financial expenses and boost the company's short-term operating performance.
Profit forecast and investment suggestions: the commissioning of Qingdao Runfeng will increase the proportion of the company's high-end double-zero aluminum foil products and improve product profitability. IPO fundraising project put into production to further improve the company's product line. We forecast that the company will earn 0.15 yuan per share and 0.24 yuan per share in 2013 and 2014, with a price-to-earnings ratio of 38 times and 24 times of the previous share price / earnings ratio.
Risk hints: the start-up rate of IPO project is low, the construction progress of 450000 ton aluminum strip project is lower than expected, and there are sudden changes in overseas sales.