Yantai Spandex: Technology Driven Growth &Nbsp; Enterprise Value Highlights

　　 Spandex Industry Demand has benefited from the revival of textile exports and short-term stability. In 2010, China's textile industry will continue to recover under the dual demand of domestic demand and exports. As the "MSG" of textiles, the demand for spandex fiber will continue to increase, and the short-term supply of spandex will be stable, and the price of products will continue to improve.

Yantai spandex is developing a new market. Through the two new projects of "medical ammonia" and "comfortable spandex", the spandex production capacity of our company will increase to 35 thousand tons / year in 2011 on the basis of 22 thousand tons / year in 2009, an increase of 59%. "Medical spandex" and "comfortable spandex" all have the characteristics of high difference, and the market and profit prospects are quite good. At present, these two kinds of products are mainly produced by international large Spandex Enterprises, and are basically blank in the local Spandex Enterprises. Spandex industry is going upward in the process. Through the expansion of production capacity, the elasticity of spandex business performance is increasing. At the same time, the differential level of Spandex Products is higher and the added value is also improved. The negative impact of the spandex industry cycle fluctuation on the company's performance will weaken.

　　 meta-aramid Capacity increase, order recovery. By the end of February 2010, the production line of the company's shutdown has been fully restored. After the technical transformation, the aramid production capacity has increased from 4300 tons per year to 4600 tons / year; the inter company aramid order has increased, and the export situation has recovered. We expect that the order of aramid will continue to grow as the international economy gradually recovers.

The progress of the aramid industrialization project is going well and will become a bright spot for the company. In view of the strong capability of R & D in spandex and aramid research and development, and the normal operation of the aramid pilot project, we believe that the probability of success of the aramid industrialization project is greater. If the industrialization project is successfully implemented, it will fill the domestic gap and break the monopoly of DuPont and Di people.

Earnings forecasts and investment proposals. The main products of Yantai spandex are walking. Differentiation Relying on strong R & D strength, it is a rare technology driven company in the same industry. At the same time, the company has good financial standing and steady operation. The main business will always have bright spots in the next few years. We think the company can enjoy a higher valuation. We expect that the 2009-2011 year EPS of the company is 0.67 yuan, 1.94 yuan, and 2.62 yuan respectively. Dynamic PE is 60 times, 20 times, and 15 times respectively. Combined with the valuation of sub businesses, we give the company 6 months target price of 53 yuan, corresponding to 2010 and 2011 PE respectively 27 times and 27 times, and maintain its "buy in" investment rating.

Major uncertainties. The expansion of textile exports and capacity in the industry will have certain uncertainties in the industry's prosperity; the risk of aramid business orders; and the technical risks to the aramid project.