Nanning Sugar: Comment on the plan of increasing

Company Status: The company proposed to raise more than 506 million yuan, for the implementation of three projects: 1 sugarcane high-yielding modern agricultural demonstration base construction project (commonly known as "ton of sugar field", the proposed transformation of 200,000 mu of low yield sugarcane), the total investment of 303 million yuan; 2) sugar industry and the industrial chain Low-carbon energy saving and emission reduction projects,　　Total investment of 130 million yuan; 3 Guangxi Qiao Wang paper Mould Products Co., Ltd. Annual output of 300 million sugarcane slurry environmental protection molding products engineering, the total investment of 73 million yuan.　　The reserve price is 19.11 yuan/share, that is, the number of additional offerings will not exceed 26.48 million shares.　　The company's current total equity is 286.64 million shares, after the issuance of more than diluted earnings per share of 8.46%.　　Comment: Because of the high sugar prices resulting in the acquisition of other sugar factory costs are very high, so the company can only through internal transformation to improve production and efficiency. Looking ahead to the first three quarters of this year sugar prices, we still maintain the early judgment: this 8 September, the new and old squeeze season handover, the domestic spot sugar prices will be washed up 8500 yuan/ton. The reason is that the annual demand for sugar in the 140.015 billion tons, and the latest forecast has cut the 10/11-season national sugar production, production of only 10.85 million tons.　　The supply and demand gap can only be curbed by high prices.　　Valuation and recommendations: As sugar prices are still in the rising channel, and the company has refinancing demands, we believe that investors can recently participate in Nanning sugar industry. Suppose 2011 years sell sugar 450,000 tons, sales average price of 7200 yuan/ton, cost 6099 yuan/ton, income tax rate 15%, then the net profit of sucrose business will reach (7200-6099)/(1+17%) *45* (1-15%) = 360 million yuan, reduced to the fixed increase diluted before earnings per share 1.26 yuan, After the diluted earnings of 1.16 yuan per share.