The company announced the B-share buyback plan, although the company's profitability can not be substantially improved in the short term, but the large proportion of the buyback, high price, will bring certain trading opportunities for B-share.
Buyback plan: the company announced today that it will buy back a maximum of 150 million shares of B shares at a price of no more than HK $4 per share, accounting for 26.9 per cent of B shares and 7.27 per cent of the company's total share capital, with a total capital limit of 333 million yuan. the repurchase price ceiling is 47 per cent higher than the pre-suspension closing price.
Results for the first three quarters: the company previously announced the results for the first three quarters. The net profit from January to September was about 1.3-190 million yuan, and the net profit of YOY decreased by 70-79%. The single-quarter net profit of 3Q is expected to be 3500-95 million yuan.
And most of the profits come from government subsidy income, the industry still has a loss of about 100 million yuan, and its profitability is weak, mainly because the recent finished paper market is still in the capacity release period of concentrated investment in the whole industry in 2008. the market surplus has dealt a blow to the sales volume and sales price of the products of the production companies.
Industry conditions: due to the concentrated production capacity of the industry, but the slowdown in demand (the growth rate is expected to be only 5% for the whole year), and the slight decline in raw materials, the price of finished paper continues to decline, with an average decline of about 10% for each variety. Recently, with the price of raw materials stable, the price of finished products began to stop falling, but the lack of demand still plagued the market, manufacturers' plan to raise prices is difficult to implement.
The relatively good news is that the new production capacity of the industry has been significantly reduced, there are basically no major projects to start construction, and the industry will be in the stage of capacity digestion in the next 2-3 years.
Profit forecast: the company is expected to achieve a net profit of 2.48 and 270 million yuan in 2012 and 2013, a decrease of 59.3 percent and an increase of 9.6 percent respectively over the same period last year. After the completion of the buyback, the corresponding EPS is 0.13 yuan and 0.14 yuan. The current share price of A shares is 2012 times and 2013 PE is 28.6 times and 26.1 times, B shares corresponding PE is 17.2 times and 15.7 times, A shares and B shares PB are 0.63 and 0.38 times respectively. As the pace of economic recovery and capacity digestion in the industry is still slow, the improvement of industry companies' profits is limited, but a large proportion and high premium repurchase bring certain trading opportunities to B shares in the short term, giving investment advice for A-share holdings and B-share buyings. the target price is HK $3.50.
