Tin Shares: Downstream Boom And Capacity Release Boosted Performance In The Second Half

Event:

In August 17, 2010,

Comment:

1, performance is in line with expectations, tin price rise and product mix adjustment.

According to the company's report, the company achieved a basic earnings per share of 0.2365 yuan in the first half of 2010, which is almost the same as the earnings per share of our company at the beginning of the year of 2010 yuan. It is consistent with the market expectation that the earnings per share in the 2010 year are slightly different from the 0.55 yuan in the 2010 year.

After careful inspection of the company's semi annual report, the company's output is not completed.

In 2010 1-6, the total volume of non-ferrous metals produced by the company was 37138 tons, 35.68% of the annual plan, 13.72% lower than the same period last year.

In particular, the company completed only 1314 tons of electrolytic lead products, 4.87% of the annual plan, down 87.69% from the same period last year.

We believe that the company is in

In 2010 1-6, the average spot price of Shanghai nonferrous metals tin was 139912 yuan / ton, compared with the 1-6 month average price in 2009, the increase was 37.25%.

In addition, the company increased the production of high margin products is also the main reason for the company's performance improvement.

In 2010 1-6, the company produced 8459 tons of tin chemical products, 76.90% of the annual plan, an increase of 69.10% over the same period last year.

The production of tin products is 8998 tons, 56.24% of the annual plan, an increase of 44.86% over the same period last year.

Judging from the gross profit margin of the company's products, the gross profit margin of the company's tin products is 14.83%, which is significantly higher than that of the non-ferrous metals production company.

13.47% gross margin.

Although the gross profit margin of tin chemical products is lower than the consolidated gross profit margin of enterprises, the gross profit margin has increased by 1.31 percentage points compared with the same period in 2009.

2, the electronic industry boom and production capacity will boost the company's performance in the second half of the year

Since the fourth quarter of 2009, the electronics industry has entered the business cycle, and the industry has maintained a year-on-year growth rate of more than 50% from the industry's leading indicators of semiconductor shipments.

As the demand for downstream industries increased, tin stocks were decreasing. From LME inventory, LME tin storage declined from 27000 tons in February 2010 to a low of 13940 tons. Compared with the annual consumption of 400 thousand tons, the inventory can only meet the consumption of 12 days.

Because of the impact of extreme climate on tin production and the increase in downstream demand such as electronics industry, we are optimistic about the price performance of tin in the second half of this year.

From the perspective of the company's capacity, the 70 thousand ton / year tin smelting system technical pformation project was completed in December 30, 2009. As of July 2010, the project has been checked and put into production, and tin production and smelting direct yield have increased. Due to the implementation of the annual overhaul in 2010, the utilization rate of the capacity in the reporting period of the project has not reached 100%.

The 1500t/d selection project of Ping tin mine was put into operation in August 2009. By the end of 2010 6, the actual capacity utilization rate was 51%, and the main reason for the failure to reach the output was that in the second half of 2009 to the beginning of 2010, Chenzhou suffered a rare drought. The water supply was seriously affected, and only intermittent production could be organized. Two, the continuous rainfall in the Chenzhou area since the rainy season in 2010, which affected mining operations, resulting in insufficient supply of mining. Three, there was a large amount of mud in the primary ores, and the granularity of the lump ore in the weathered ore was large, which was easy to cause equipment blockage, difficult pportation of ore and stop production.

During the reporting period, the company's one hundred thousand tons of lead smelting technology pformation project has entered the ignition test phase, the original lead smelting system has been shut down, and the output of lead products will rebound after the company's one hundred thousand tons lead smelting system is formally put into operation.

We believe that in the second half of 2010, the company's new projects will gradually reach production.

Electronics and other downstream industries and productivity will boost the company's performance in the second half of the year.

3. Profit forecast and investment rating

We believe that the strong demand and supply difficulties of downstream enterprises will be sufficient to support the current price of tin products.

Based on the prices of the current tin products and the company's business plan, we take into account the capacity of the new projects in the second half of 2010. Then, according to our profit forecast model, our Forecast Ltd's net profit in 2010 is roughly 408 million 890 thousand yuan. In June 30, 2010, the EPS is roughly 0.51 yuan per share, which is calculated at August 17, 2010 closing price, and the dynamic PE in 2010 is 40.94 times.

As of August 17, 2010, the dynamic price earnings ratio of the nonferrous metals industry in 2010 was roughly 41 times. At present, the valuation level of the nonferrous metals industry is roughly the same as that of the industry. From a historical point of view, the level of the fair market rate of the non-ferrous metal industry is 3-5 times. Considering the characteristics of the small metal and the status of the industry, it gives a certain premium. We give the company a 4-5 times market price level, and the reasonable price is about 20-25 yuan.

Give the company "recommended" rating.