When the production capacity of medium and low voltage cable manufacturers is expanding. The company is engaged in the research and development, production, sales and service of wires and cables, including power cables, electrical spare wires and cables and bare wires, the main voltage level is below 35kV. In the first half of 2010, the company's operating income was 509 million yuan, and the revenue of power cable products accounted for 79.49%. The company's power cable production capacity is in a period of expansion, with an annual production capacity increasing from 10700 km in 2007 to 21000 km in 2009, with an annual compound growth rate of 40%.
Voltage determines the market pattern of the company to achieve structural optimization. In the field of medium and low voltage power cables, the domestic market concentration is low, the production capacity of enterprises is higher than the market demand, the market competition is more fierce, and the profit space of enterprises is seriously squeezed. In the field of high-voltage and ultra-high voltage power cables, domestic ultra-high voltage cross-linked cables basically rely on imports, and only a few domestic enterprises such as special Shandong cable and Qingdao Han cable can produce high-voltage and ultra-high voltage cross-linked cables. The company sets foot in the high-pressure and ultra-high-pressure market through fund-raising projects, which will enhance the company's profitability and achieve the improvement of the company's gross profit margin; at the same time, expand the company's product market space and achieve the rapid expansion of business volume.
The speed increase of UHV line construction drives the matching demand of HV cable. According to the statistics of State Grid and Southern Power Grid, eight UHV lines will be built in China by 2012. according to the published data, the total investment is about 152.2 billion yuan. The acceleration of UHV line construction in China will drive the demand for supporting products such as high-voltage cables and open up the market space for the company's investment project products.
The business of raising investment into the high-pressure sector gave a 2011 boost. The funds raised are invested in the project of "500kV environment-friendly flame retardant ultra-high voltage cross-linked cable and 500kV resource-saving aluminum alloy overhead line". The new production capacity of the project includes: 110kV, 220kV, 500kV environment-friendly flame retardant high voltage cable, ultra-high voltage cross-linked cable 600km, aluminum alloy overhead line 10000 tons. Before passing the pre-qualification test of 220kV and above cross-linked cables, the company mainly sells 110kV cross-linked cables and aluminum alloy overhead lines. The boost effect of fund-raising projects on the company's business will gradually become apparent in 2011.
The reasonable value range of the company's stock is 13.50-15.75 yuan. We predict that the company's earnings per share from 2010 to 2012 will reach 0.45,0.61,0.88 yuan. Combined with the valuation level of the same industry, we give the company 30-35 PE in 2010, the corresponding value range is 13.50-15.75 yuan, it is recommended to apply carefully.
The main uncertainty of the company. (1) the risk of copper price fluctuation, (2) the risk of fund-raising project, (3) the risk of market competition.
