Yantai Wanhua: Economic Downturn Affects Operating Rate

Annual report: in 2008, Yantai Wanhua (600309 quotes, love shares) (600309) realized sales income and net profit respectively 7 billion 704 million yuan and 1 billion 509 million yuan, down 1.27% and 1.47% respectively compared with the same period last year, achieving EPS 0.91 yuan.

The company intends to pay 5 yuan for every 10 shares.

Brief comment: the global economic downturn affects the company's operating rate. The company's profit model is sustained growth in production and sales to achieve sustained high growth in profits.

In 2008, the company's business income decreased by 1.27% compared with the same period last year, while the annual average price of the MDI market decreased by about 25% compared with the same period. The actual sales price of the company should be less than this figure, so that the sales volume of MDI in 2008 will grow by about 8%, about 365 thousand tons.

At present, Yantai Wanhua (600309) MDI capacity has reached 500 thousand tons / year. It is evident that the global economic downturn in 2008 has affected the operating rate of the company to varying degrees.

The decline in operating rate is expected to make the gross profit margin of MDI enterprises characterized by heavy industry adversely affected - Yantai Wanhua (600309) sales gross margin of 31.28% in 2008, the lowest since 2000.

Obviously, the decline in operating rate caused by the global economic downturn has significantly affected the company's 08 year performance.

Forecast: future MDI prices are expected to rise again, leading to an increase in the company's operating rate.

In the early days, the author has released the 081111 Yantai Wanhua trend: it is expected to benefit from the "ten measures" to maintain "buying" and "Wanhua 081203 dynamics in Yantai": to drive home appliances to the countryside to boost MDI consumption by 10%, and to maintain "buying". It is pointed out that policy support is expected to make steady demand for MDI downstream demand.

The steady recovery of MDI prices is expected to stimulate the rise of the company's operating rate, so that the profitability of Yantai Wanhua (600309) is expected to be bottomed out in the second half of 2008, showing a quarterly growth trend since the first quarter of 2009.

It is worth mentioning that second sets of 300 thousand tons / year MDI installations in Ningbo base of the company are advancing according to plan, and are expected to be put into operation in 2010 to meet the demand expansion of the downstream building energy-saving market.

In 2009 and 2010, the company's performance increased by 17% and 39% respectively.

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