Attention; Xinjiang Bayi Iron & Steel Plans 2 Trillion Investment Benefit
Dongxing Securities Sun Jiqing Event: Recently, our investigations of the August 1 Steel Instead of secretaries to directorate Chen Haitao depth and visit the company's plate production line. After research, we expect the Bayi Iron & Steel 6.2 million tons of crude steel in 2010, Steel 5.88 million t, the output will increase 16%, accounting for 60% of the long steel production capacity will be to maintain profitability and ensure its profitability, but Plate Poor profitability. Consider its benefits in the Xinjiang region of rapid development, projected 2010 earnings per share on August 1 Iron and Steel 0.65 dollars, we still maintain its "recommended" investment rating. Specific research information as follows:
Q: what is the advantage Bayi Iron and Steel now?
A: Bayi Iron and Steel has five major advantages: geographical advantage, Xinjiang, a vast market is relatively independent Xinjiang, the largest steel companies, the market share of 70%; indirect enjoyment Group resources, although there is no iron ore Bayi Iron and Steel , but the group has a mine, self-sufficiency rate of 37%, hot metal related to cost-plus pricing method, indirect cost advantage enjoyed; Marketing Network edge, Bayi Iron & Steel in the Northwest and Southwest have a sound marketing network, and joined the Baosteel Group, you can enjoy Steel's marketing network, Sell Sheet favorable; technical advantages, mainly due to the support of Baosteel, wind power and Oil Petrochemical Steel will become the focus of the company's future product development; policy advantages, the state support of Xinjiang Bayi Iron & Steel direct benefit.
Q: The Bayi Iron & Steel Assets load rate is high, what a good solution?
A: From the perspective of a quarter, a higher debt ratio Bayi Iron and Steel 77%, higher financial cost. Since Aug. 1 there is a big steel and major shareholders of related party transactions, not from the secondary market financing, short-term assets is also not solve the problem of high rate loading. Can the future by addressing the related financing transactions, there are still many difficulties.
Q: Bayi Iron and Steel production is also continued to expand, mainly whether to further adjust product structure?
A: From now, on August 1 with 7.6 million tons of steel Steel Capacity, but a lack of iron production processes, new projects are still restricted by national policy. The main structure of production, 3.6 million tons long products, plate design capacity of 650,000 tons, the ongoing transformation, is expected to reach 1.2 million tons, sheet capacity 3 million tons.
Steel production from August 1st of view, utilization of low plate, plate capacity utilization is only about 80%, while the finished product rate is also only 88%, significantly lower. Coils is about 1.8 million tons of production, capacity utilization was only 60% of low capacity utilization is the main reason for loss sheet.
Output from the 2009 run, Bayi Iron & Steel timber producing 5.08 million tons, of which 3.4 million tons of long steel, accounting for 60%. Expected to produce 5.88 million tons in 2010.
Xinjiang Bayi Iron and Steel area currently benefiting from a substantial increase of investment in fixed assets, Building Steel strong profitability, net profit of 200 yuan / ton, while the plates and coils of low capacity utilization, the basic balance in the profit and loss.
Expected future consumption of long products strong in Xinjiang Bayi Iron and Steel long products production capacity to expand the plan, but its implementation depends on national efforts to control the steel industry. We believe that even if the Bayi Steel to expand capacity, contribution to profit should wait until after 2013, subject to location, transport, water restrictions in the short term is difficult to implement new production line.
Q: How do operation on the steel market and determine how the future?
: The view from the first quarter, Bayi Iron & Steel profit in line with expectations, mainly due to increase in sales, first quarter sales of 1.5 million tons, only sold 660,000 tons in March, while in April, after rising steel prices , sales dropped to 50 million tons, steel prices have now declined, while sales also declined, we believe that corporate profits are still protected by the first half, but the second half of the increase in earnings uncertainty.
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