Bauxite shares: disperse dye business boom

Business Club July 12, the main point of view:

Bauxite is the second largest dye enterprise in China. The main revenue and profit comes from the disperse dyes business, with a capacity of 110,000 tons/year of disperse dyes, a domestic market share of about 30%, and a reactive dye production capacity of 30,000 tons/year, domestic market share. About 15%, the compound annual growth rate of net profit in the last three years was 22%. Bauxite shares the dye business, while Zhejiang Longsheng, a listed company in the same industry, diversified its business on the basis of dyes.

Disperse dyes industry presents an oligopolistic competitive landscape. Leading companies such as Bauxite shares have industry pricing power. Reactive dyes industry is more competitive than disperse dyes. Currently, the disperse dyes industry is in a more booming phase, while the reactive dyes industry is relatively poor. .

The company's IPO fundraising projects, including high-grade disperse dyes, dye intermediates, and ion-exchange membrane caustic soda, will be put into operation successively between 2011 and 2013 and will be the driving force for the company's future growth; the acquisition and increase of capital in Jiangsu and Li Rui, and the proposed increase in investment in Yorkshire Chemical Holdings The three major M&A activities, including the proposed acquisition of Jiangsu Mingsheng, reflect the company’s strategy of “backward integration”, optimizing product structure, and exploring the international market. Through the integration of the industrial chain, the three acquired companies will become the growth in the performance of the shares of the company. A major driving force.

We expect the company's 2011-2013 earnings per share to be 1.30 yuan, 1.54 yuan and 1.85 yuan respectively, with a compound annual growth rate of net profit of 22%, and 2011-2013 dynamic price-earnings ratios of 18, 15, and 12 times respectively. We maintain the company's "Buy" investment rating, 6-month target price of 28.60 yuan, corresponding to 22 times 2011 earnings.

Risk Warning: (1) The degree of prosperity of the textile printing and dyeing industry; (2) Progress of new projects.