The supply and demand pattern of viscose staple fiber continues to improve, the profit space expands, and the company's performance is improved. After years of downturn, viscose staple industry capacity growth gradually slowed down, coupled with the steady growth of downstream demand, the industry supply and demand pattern has been greatly improved. By the end of 2016, the total production capacity of viscose staple fiber in China was about 3.73 million tons, and the demand in 2016 was about 3.5 million tons. There is a basic balance between supply and demand in the industry. In 2017, new production capacity in the industry is still relatively small, and demand is expected to maintain an annual growth rate of 4%-5%. The devaluation of the RMB is expected to further boost export demand for textiles and raw materials, and supply is expected to remain tight.
Since the beginning of winter, strict environmental regulation has led to a reduction in the load of some viscose staple fiber manufacturers, while industry inventory is at a historical low. driven by the demand for stock in the off-season, the average transaction price of viscose staple fiber has increased by 8.3% since the beginning of December. it has increased by 30.1% since the beginning of 2016. at present, the quotation for middle-end viscose staple products is 16600-17000 yuan / ton, and the high-end price has reached 17000 yuan / ton. Product prices are expected to continue to rise in the post-holiday peak season.
The company's viscose staple fiber equity production capacity of 225000 tons, viscose staple fiber price difference of 1000 yuan / ton (including tax), the company's EPS will increase 0.23 yuan, viscose short fiber boom improvement will bring greater performance elasticity for the company.
The medical and health business is advancing steadily, and the profit contribution is increasing steadily. Aoyangjian Investment, a wholly-owned subsidiary, currently has four general hospitals with a total number of 2200 beds. In addition, the company's rehabilitation medical chain project is progressing smoothly. At present, it has invested in the construction of a number of rehabilitation hospitals, and the economies of scale are gradually highlighted. AIIIC contributed 37.37 million yuan in performance in the first half of 2016, and is expected to contribute more than 60 million yuan in committed performance for the whole year. With the steady progress of medical and health business, AIIIC's 2017 performance is also expected to exceed the committed performance of 72 million yuan.
Exchangeable debt for share price high premium provides a margin of safety. Aoyang Group, a major shareholder of the company, intends to issue no more than 950 million yuan of exchangeable bonds, the first issue of 500 million yuan of bonds has been completed, the conversion price of 13.10 yuan per share, the margin of safety is sufficient.
Maintain the "overweight" rating. Aoyang Technology is one of the leaders of viscose staple fiber, the profit of viscose staple fiber continues to improve, and the performance is more flexible. The company's medical and health business contributes to stable performance, and gradually enters the field of medical rehabilitation with huge space for future development. We estimate that the EPS of the company from 2016 to 2018 will be 0.37,0.65 and 0.72 yuan respectively, maintaining the "overweight" rating.
