The company is the second largest carbon black manufacturer in China. According to the statistics of the carbon Black Association, the company's carbon black market share is about 6.46%, and the underground carbon industry can reach 300000 tons. The company has the advantage of comprehensive utilization of technology and resources, and the cost advantage is remarkable. Since 2007, the product gross profit margin has been ahead of comparable listed companies by 2-8 percentage points.
The development prospect of domestic carbon black industry is good, and domestic large-scale enterprises benefit from high oil price & industry integration. About 67% of carbon black is used to produce tire rubber. We expect the domestic tire demand to increase by about 13% in the next 2-3 years. We optimistically predict that the domestic carbon black industry will maintain a growth rate of more than 20%. Under the background of high international oil prices, domestic coal tar method has more cost-effective advantages than foreign ethylene tar carbon black. In January 2012, domestic carbon black exports continued the good momentum of 2011 exports (an increase of about 117% over the same period last year). The year-on-year growth expanded to 173.74%. It is expected that enterprises with scale and technological advantages will fully benefit. Compared with the high concentration of global carbon black production capacity, the capacity concentration of the domestic carbon black industry is lower, and it is expected that large-scale enterprises will gain more market share in the industry consolidation.
The project has been put into production one after another, and the performance growth point is obvious. 1) the company put into full production of 80,000 tons of carbon black project in Shahe local port in September 2011, and is expected to contribute to the annual production capacity in 2012; 2) Jiaozuo Longxing Phase I project 2.
The 35000 ton carbon black project was completed at the end of 2011 and is expected to be put into production in 2012. Through strategic cooperation with ChemChina Rubber, the market is guaranteed. 3) the white carbon black project is expected to be completed and put into production by the end of August 2012.
Profit forecast and investment rating. According to our forecast, the company's earnings per share from 2011 to 2013 are 0.38,0.46,0.66 yuan respectively, corresponding to the closing price of February 29th (9.05yuan), and the price-to-earnings ratio are 23.96x, 19.67x and 13.69x respectively. Compared with business comparable listed companies, it has certain valuation advantages, taking into account the obvious cost and technical advantages of the company, and the project has been put into production one after another to contribute to the performance.
Risk hints: the risk of large fluctuations in the price of coal tar raw materials; the lower than expected production and operation of the project; and the risk of boom fluctuations in the downstream industry.
