Main points of investment
The demand side of the industry is stable, the period of low-price competition has passed, and the competition pattern in the industry has improved.
The downstream demand end of the company's product casing is mainly oil production enterprises. due to the rigidity of energy demand, the global and Petrochina production has maintained an overall growth trend, and the demand side of the company's products is stable. at present, the global and Chinese oil casing demand is about 15 million tons and 3 million tons respectively. The main reason for the difficult price increase and poor cost transfer ability of oil casing production enterprises in the past two years is that since the second half of 2009, the United States and Canada have implemented anti-dumping policies on related products, and the deterioration of terms of trade has led to an oversupply of oil casing products made in China. Under fierce competition, enterprises in the industry fought a price war, and product prices fell to the lowest point since 2008 in the first quarter of 2011. After a round of reshuffle, the stage of low-price competition has passed, the competition pattern in the industry has improved, and product prices have rebounded and stabilized.
The price of steel, the main raw material, is downward, relieving the pressure on production costs. The cost of steel, the main raw material of the company, accounts for 70%. Since 2009, steel prices have continued to rise, and steel prices have been running high in the first three quarters of 2011. as a result, the company's gross profit margin continued to decline, with gross margins of 19.12%, 17.25% and 12.02% in the first three quarters of 2011, respectively. Steel prices began to decline in the fourth quarter of 2011 and are now back to the level of September 2010. although steel prices may pick up slightly in March and April due to the peak season, the possibility of steel prices returning to the 2011 price level is very slim. in addition, according to our research found that there is a certain degree of reverse relationship between the company's gross profit margin and steel prices, so after the steel price decline, the company's profitability is expected to improve significantly in 2012.
The capacity utilization rate of the 180mm project is expected to increase, and the manufacturing cost per unit product tends to decline.
At the end of December 2010, the company put into production the investment and renovation project of 180mm oil special pipe, with a design capacity of 400000 tons. On the one hand, it takes a period of running-in after the new production line is put into production, various process tests and unstable yield will increase the manufacturing cost per unit product, in addition, after the project is put into production, the depreciation of new fixed assets in 2011 will reach 57.06 million yuan; on the other hand, the annual output of the project is about 200000 tons, and the capacity utilization rate is 50%. The surge in depreciation and low capacity utilization has not yet produced economies of scale, resulting in high manufacturing costs per unit of product, affecting the company's performance in 2011. According to our calculation, the company's output in 2011 is about 400000 tons, and it is conservatively estimated to be more than 500000 tons in 2012. At that time, after the capacity utilization increases, the company's unit product manufacturing costs will tend to decline.
