HTC new material: Monomer technology breakthrough bottleneck

Domestic demand to maintain a high growth in the organic silicon industry downstream demand, dispersed in the industrial production and residential consumption in various areas, so from the global perspective, the demand for silicones and GDP is very relevant, but the growth rate is higher than about 4%-5% of GDP. From the domestic scope, from 2001 to 2009, the apparent consumption of silicone monomer in China increased by more than 25% annually.　　We believe that in the downstream automotive, electronics, construction, consumption and other applications to pull, the next 5 years, silicone consumption will still not less than 20%. Although in the organic silicon monomer production, the domestic has the very big progress, but in the organic silicon downstream application development, the domestic still is in very backward level. From the consumption of silicone, China's consumption per capita in 2008 less than 1/3 of the United States, Europe's 1/2, from which the popularity of silicone materials can be issued. From the variety see, the international organic silicon variety number has tens of thousands of species, while the domestic is not thousands of species, and are basically limited to the low-end application areas, such as automobiles, electronics and other high-end areas accounted for very little.　　Therefore, in the case of key monomer production is no longer a bottleneck, domestic silicone downstream applications and demand will continue to grow rapidly, in the next 5-10 years, the silicone industry will continue to maintain rapid growth is expected. Silicone monomer production breakthrough bottleneck Hongda new material (002211) silicone monomer device located in Zhenjiang Changjiang Branch, the original 30,000 tons of production capacity, but due to technical problems, the installation rate has been low. After the company's efforts, the company is currently the production of silicone monomer breakthrough bottlenecks.　　IPO project silicone monomer 30,000 tons of 75,000 tons of transformation has been in operation in early April, at present a stable operating time has reached 30 days, the current device running well, the two-methyl selectivity and other technical indicators to reach the domestic industry-leading level. We believe that the company's production level of silicone monomer, is the company's business to re-enter the rapid growth of the landmark event. Although the current domestic silicone monomer has a basic balance of supply and demand, the future overcapacity situation is inevitable, the high gross margin of individual enterprises will not return, but for the company, monomer production is the key to the development of the company, the solution of the monomer problem, on the one hand, can guarantee the company High-temperature mixing raw materials On the other hand, through the extension of the industrial chain, to obtain more profit space.　　We expect in 75,000 tons of equipment gradually up to the postpartum, the company's gross profit margin will be improved, conservative estimate of 2010 monomer production on the overall gross profit should be able to contribute in 2%-3%, 2011 will be on the existing basis, improve the gross margin of more than 5%.　　The company has announced that will be directed additional, construction of 70,000 tons of silicon material production equipment, complete completion of the company will have 75,000 tons and 160,000 tons of two sets of monomer production capacity, which will promote the company downstream of the development of new varieties, the company's development into a virtuous circle. High temperature mixing capacity release Company is a leading enterprise in the field of High-temperature mixing, at present, whether the production or grade type, only the Nanjing East and the company officeTo the same horizontal line.　　The company's current production of mixed rubber has two main bases, one is in Yangzhong headquarters, one in Dongguan, the company is expected to the end of this year, mixing capacity will be able to reach 80,000 tons. Company sales in the first quarter is good, sales should be more than 10,000 tons, sales price has risen 1000-1500 yuan/ton. But because of the company's Yangzhong plant fire accident Parking, it is expected that the overall sales in the two quarter will be affected. At present, Yangzhong production has returned to normal. Dongguan base This year sales situation is very optimistic, the basic stock is not available.　　We expect 3, 4 quarters of the company's sales will still be able to show a hot situation, the price of 1000 yuan/ton of the rising space, the annual sales volume of about 48,000 tons, the overall present volume price Zisheng situation.　　In the future, we believe that there is still room for further improvement in the market, the company's new expansion capacity should be able to digest. Profit forecast and valuation basic assumption: 1, 2010, 2011 The market price of mixed rubber is 23000, 25300 yuan respectively, 2, 2010, 2011 mixed rubber sales were 48,000 tons and 60,000 tons, 3, conservative estimate 2010, 2011 company monomer production is 15000 tons respectively, 25000 tons. On this basis, we expect the company 2010, 2011, 2012 earnings per share of 0.33 yuan, 0.6 yuan and 1.01 yuan. Combined with the current market situation and the development trend of the company's industry, we believe that the reasonable value of the company can be given a 2011-year dynamic P/E ratio of 30 times times, corresponding to the target price of 18.0 yuan, give "buy" rating.