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世纪阳光(509.HK)调研简报:稀土镁合金业务值得期待

Century Sunshine (509.HK) Research brief: rare Earth magnesium Alloy Business is worth looking forward to

國元(香港) ·  Mar 10, 2014 00:00  · Researches

1. Performance profile for 2013:

Realized income of HK $1.64 billion, an increase of 32% over the same period last year; profit of HK $230 million, an increase of 76.7% over the same period last year, consolidated gross profit margin of 31%, net profit rate of 16.9%, basic profit per share of HK8.96 cents, dividend payout ratio of 22.3%. The profit growth significantly exceeded the revenue growth, mainly due to the increase in the proportion of the company's high gross margin products, and the substantial growth of high gross margin organic fertilizers and rare earth magnesium alloy products contributed significantly to the company's profits.

2. 2013 classified income and profit before tax:

Income: fertilizer business accounts for 63%, metal magnesium business accounts for 33%, other business accounts for 4%.

Gross profit margin: fertilizer business gross profit margin 26.4%, metal magnesium business 34.8%.

Profit before tax: fertilizer business accounts for 56%, metal magnesium business accounts for 42%, and other business accounts for 2%.

3. General situation of ecological fertilizer business:

Income composition and classified gross profit margin: compound fertilizer accounted for 53%, silicon and magnesium fertilizer 27%, organic fertilizer 20%, compound fertilizer (containing silicon and magnesium fertilizer) income increased by 22% year on year, organic fertilizer revenue increased by 57.9%. The gross profit margin of compound fertilizers is 22%; the gross profit margin of organic fertilizers is 37.9%. The substantial growth of organic fertilizers with high gross margin makes a significant contribution to the company's profits.

4. General situation of magnesium metal business:

Income composition and classified gross profit margin: 30% for basic magnesium products (2012: 44%), 66% for rare earth magnesium alloy products (2012: 66%), and 4% for other products (2012: 4%). Gross profit margin of basic magnesium products was 16.8%, down 7.8 percentage points from the same period last year; gross profit margin of rare earth magnesium alloy products was 40% (2012: 39.4%)

5. Future production capacity planning:

Fertilizer business: the existing production capacity is 450000 tons, an increase of 300000 tons is expected to be put into production in the third quarter of 2013, the production capacity is expected to reach 750000 tons in 2014 (production contribution 50-550000 tons), and the target production capacity in 2016 is 1.15 million tons, of which 35% is compound fertilizer (2013: 46%), organic fertilizer is 25% (2013: 30%), compound silicon-magnesium fertilizer is 40% (2013: 24%), silicon-magnesium fertilizer has more room for growth.

Metal magnesium business: annual production capacity of 16000 tons, actual output of 17331 tons in 2013, technological transformation capacity of 25000 tons in 2014, and target production capacity of 75000 tons in 2016. The share of production capacity of rare earth magnesium alloys and basic magnesium alloys was 49:51 in 2013, with a target share of 80:20 in 2016. The future market demand for high value-added rare earth magnesium alloys is about 40 million tons, which is the focus of the company's future development.

6. Capital expenditure:

Capital expenditure is 350 million yuan in 2013, 300 million in 2014, 200 million in 2015 and tens of millions in 2016. The financing from IFC is mainly used to replenish liquidity.

7. Market application demand of magnesium metal.

60% of the transportation sector (including cars and rail trains), 30% for electronic products, and the other 10%. Among them, automobile mold casting alloy is the main growth force in the future. The company's dolomite mine and production base is located in Jilin, which is the production base of China's heavy industry. Large heavy industry enterprises such as Beiche, FAW and Zhongwang aluminum are all company customers.

8. The company's core competitive advantage:

The leading patented technology and differentiated product competition strategy of rare earth magnesium alloy. The company is the only enterprise listed as the first "demonstration base for comprehensive utilization of mineral resources" by the Ministry of Finance and the Ministry of Land and Resources of China. In the past, the production capacity of 50, 000 tons was 550 million, and the Ministry of Industry and Information Technology subsidized 140 million, with a subsidy ratio of 25%. Now the subsidy ratio of the Ministry of Land and Resources is 50%. The company has a subsidy of 25 million yuan in 2013, and the Ministry of Land and Resources should verify the project, send someone to inspect it, and pay according to schedule every year.

9. Rare earth magnesium alloy technology of the company:

On June 30, 2013, the company introduced Changchun Institute of Applied Chemistry of the Chinese Academy of Sciences for cooperation. China magnesium, a subsidiary of the company, signed share subscription agreements with Hong Kong Zhongke Ying Chemical Technology Development (Zhongke Ying Chemical) and Hong Kong Jiu magnesium rare Earth Alloy respectively. Zhongke Ying Chemical and Hong Kong Jiu magnesium rare Earth Alloy together subscribe for 3% of the expanded new shares of China magnesium Industry. Zhongke Yinghua Hejiu magnesium alloy is composed of Changchun Institute of Applied Chemistry and related professionals of magnesium alloy, Chinese Academy of Sciences. Changchun Institute of Applied Chemistry, Chinese Academy of Sciences is the most authoritative national scientific research institution specializing in rare earth magnesium alloy research.

10. Our suggestions:

The biggest focus of the company in the future will be the rare earth magnesium alloy business. At present, the company is ahead of the industry in technology. In the next 2 years, the company's production capacity is concentrated and released. In 2014, the dynamic PE is about 7 times, and its financial stability is worthy of attention.

The translation is provided by third-party software.


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